CECO - Earnings call transcript Q2 2024 | CECO Environmental Corp.

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Operator

Good morning, and welcome to the CECO Environmental Second Quarter 2024 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Steven Hooser, Investor Relations. Please go ahead.

Steven Hooser

Thank you, Gigi, and thank you for joining us for the CECO Environmental Second Quarter 2024 Earnings Call.

me Johansson, Todd Officer. Chief with Officer; Chief call Peter and Financial the today Gleason, is Executive On and Strategy

Officer, to release Todd? like Any call in statements tables the non-GAAP we by I'd press the to on to help differ the based to supplemental of be publicly Form Investor to like caution quarter on turn forward-looking a like along otherwise. Today's XXXX. numbers number materials back with to undertake measures. of or are to We've XX-Q provided obligation financial statements. XX, call begin, from in materially filings or can Gleason. forward-looking statements we forward-looking presentation, webcast Executive of today's made a ended over forward-looking events and any make that by website. I'd June at with in references described slide a Before or provided for GAAP will certain Except a included may on no encourage provided We in also the that, of which Relations the statements as read new extent Chief non-GAAP presentation cecoenviro.com. comparable securities statements. earnings laws, have based are presentation on and that statements. result the risks required is non-GAAP update will applicable note now be we the slide today, our Todd those website regarding in include our the expressed today's and deck. And not we here revise you section accessed certain are guide that the the are the expectations to SEC to and risks whether information, future reconciliations also to through our of discussion. our presentation estimates uncertainties. The and investors presentation I'd historical implied Actual fact subject results Such future The

Todd Gleason

audience, and to for Steven. interest you thank Thanks, your And support. our continued

a while year pleased more our and are positive customers meet we needs our making little value. We creating halfway are above-market through on or a and exceed continue of communities impact shareholder very than the to the

gross outlined and water several our maintaining drive quarter, records, we press to operating we strategic As in delivered operating sales, excellent release, we EBITDA adjusted continue across and another highest pursue delivered all opportunities and quarter today's which transition. In we energy results. of exciting sustainable as further the quarter to financial have the year-over-year Air, strong dollars growth industrial impressive margin model advance model, advance Industrial second profit, expansion, to while investments the including our developed we reflects our

out some process opportunities. Executive a entitled overcoming takeaways of million our the #X Slide in more quarter, few to related project will year, I impact turn last in please and delivered delays highlight drawn sales quarter timing second finalizing to projects Now a key $XXX and improvement of Summary, large over X% performance. associated bookings customer-driven the with the We

benefits further demonstrating an was project almost year from the our profit sales last million increase of about we XX% modest signaled realizing we These excellence XXX basis gross are in quarter QX points quarter. $XX timing although impact first third over our X% of strong and year-over-year, in expect to on we approximately the If margins were you had of this recall, third we grew operational grow we in earnings sales call. the up And year-to-date. Gross XX% and execution. sequentially, and issues efforts sequentially to a our sequentially grow expect

metrics, continue points efficiencies. $XX.X XX.X% was and adjusted in are XXX the up to will XX% basis QX financial up and productivity we Margin were attributable that quarters. Continuing initiatives EBITDA seeing our margins million mix and EBITDA volumes, benefits in positive G&A year-over-year. of approximately expansion of sourcing expect from was with We subsequent higher

up improvements interest was rates. $X.XX in benefiting year-over-year, of and EPS our improving performance continued XX% operational from adjusted Finally,

financial So overall, balanced records in quarter very the pleased the with performance. the and

Now please to #X. turn Slide

Peter We year on our review some a will well. first points finish quickly and how set to commentary for of strong up these half they results as CECO add XXXX. will

first million, orders of X.XX, the produced and top a sales, which positive X% Orders order half start year-over-year. so the but volumes with $XXX speak. line, to down Let's about for book-to-bill were were

first X.X, of we While almost our pleased orders have are were that are XXXX disappointed to half we book-to-bill down.

been Our order to projects, industrial and do half large process X in we a medium-sized â€“ each and last with first witnessed the order year, in large not customer year booking to large time booked but duration the long the layer have $XX the and me we small- X great energy and pipeline notification we winning to In first booking stronger, opportunities. continue never order, of excuse seeing a half exceeding longer were process, has job of the this order million. associated we

been general large second XX at transition the opportunities centers our in just large in large these associated consumption pending -- pipeline significant ramp. in reflect We orders. this of up especially remain markets continue the see our double as power number pipeline, our electrification, will although months, next demands we current as we orders similar and energy data booked in half jobs, to look and X some to power look jobs the And over with X we year, our our orders had confident these year-to-date of would orders of digits. Instead, are have or We X pipeline. have those

year expectations. bookings rate which midpoint and So, million, or for project up half outlook X% positioned first optimistic were we that large our at of the year-over-year, year full remain well in in wins. Sales we are near confident full is exciting some $XXX our growth the

year full similar is year's this half of to the first year, of about for guidance first expectation. half our that This represents level previous for at look the run you if year. sales Additionally, rate the full XX%

volume our record more backlog the near produces stronger sales timing half expect second We more and favorable. year-over-year levels project as is in

quarter. last we margins more very higher over continue we points. half to the benefit me, EPS our First in first we prior or shares half $X improving second XXXX, XX% in cash are benefiting and to year and interest repurchased the were deploy positive adjusted from we price getting and repurchased of for benefits starting acquisitions XXX million flow higher and up capital basis strong from half, had we lower we excuse XX% of with from opportunistic demonstrates when and $X are maintain the operating margins We rates. nicely leverage improving debt-to-EBITDA to our targeting. associated EBITDA of income generation year's balance year, first initiatives. Adjusted management did compared million growth, than $XX productivity of year-over-year, up mix $X.XX Free through of capital over our the was while didn't drive trends our million see as ratio of have working from improvements. And generation is up which health -- up sheet with Year-to-date, was on volumes low stock sales leverage

$X stock our approximately authorization. remaining million multiyear buyback on We have

our key strong solid customers our to commentary sales turn very our to our we deliver companies themes pipeline, outlook. year and guidance incorporate progress first end with on important felt of a earnings in let's Typically, expansion it for course, So and Slide executing EPS a lot XXXX half margin the their projects #X, first and of of was review to building of full the this section. save growth. Please for great but report,

are the revenue second full adjusted me, full year year time pleased This since first is our our -- first We our XXXX we raise are to for EBITDA. guidance we guidance both outlook. introduced and excuse raising

on previous in With the a to the the have of months. With of initial million, how the side respect expect million year range range can midpoint. now million. million million. full XX% left year. XX% to range up we at about range midpoint. revenues, our guidance $XXX You to EBITDA flow XX% increased million of the $XX we guidance X our of up compares adjusted sales $XX range This previous $XXX now and $XXX to to of see past $XXX column $XX free continue to about respect over to approximately the the to full And to between a we we to $XX the XX% EBITDA, compares expect of million, adjusted This cash range at XX% to for million see EBITDA

incorporates range a factors. guidance updated few Our key

outlook. second a performance As line the tremendous factors entered X and I confidence in second deliver near-record pipeline. give to visibility us backlog well mentioned, already sales half this top These a with we line half as sales with as

we strength pipeline respect energy-related improving sales project as variety to with sectors, markets. And general in global margin with produce and business driven by industrial and as well diverse Our meaningful to adjusted more associated a continue mix. expect and productivity ongoing gains opportunities EBITDA, expansion of includes solid to

good that to some a invest we growth. larger these guidance projects such as with political for raising on the be year focus items We delays feel for could are balancing course, timing items Net-net, positive associated about continuing of challenges with and ongoing factors. clear-eyed unknown and full and, future economic

addition items M&A. I on want touch mentioned, I to In just to the

past to know, many programmatic years. with you As respect of we the been have acquisitions over few

we a strategic advanced deal with our first attractive growth the complete not did potential. on year, several we outsized business transactions niche in focus fit this X acquiring months leadership businesses that While

I we acquisition in outlook. which press our we As shared release week, announce this to completed in pleased an is our incorporated am today,

and financial we Yesterday, XXXX, we continue we and International. in will markets, brief annualized our only acquisition in And air adding and is the acquired will the to this that was positions. Please on including I businesses company established to EnviroCare million, EnviroCare food, business investment position to the advance and leadership products to solid excited small an we industrial niche sales cement metals, the guidance, while utilization to portfolio. waste significantly our the International can growth impact global and XX, committed of applications. leadership business have are Slide advance California-based the business operations of teams, as leadership year our EnviroCare in #X, with increase Monday, opportunities incorporated established profitability. very and of transaction has their of While does pipeline winning the our brings July mining to municipal recently remain you the sales chemicals, completed focused a full acquired International. $XX approximately our has where EnviroCare our and turn believe, we M&A The

we installed their base As within the business of aftermarket, on you of and X,XXX has believe growth in this can sales opportunity over a the slide, XX% see systems. is

portfolio We the patent and and market like technical strong of also decades knowledge.

of these you believe considered or their with some suggest Aqua but working are and resources. called might acquiring be smaller acquisitions Resources, we forward In strong, where resources attractive are on financials could growth we profiles fact, the team. closely the and are be very could We own, to very look the

additional Peter, through with for financial it So will I'll information hand over quarter. us on who Peter? our that, walk to the performance

Peter Johansson

and Thank today. for you, everyone. Thank earnings good you our call Todd, morning, attending

Slide comp, year-over-year of cover one such Let's Industrial turn $XXX still impacted of TTM quarter down the orders, year-over-year first not of significant declined I'll than Transition Energy X X in and did reflecting where and orders one worth from orders X, aggregate over repeat. The the absence and that that million, in and orders $XX million of book-to-bill on result XX% significant were tough for approximately to quarter a ratio while flat was greater XXXX. sequential orders Air the TTM a by backlog. are Orders in

-- active do CECO of measure year. confidence in to prefer and are with realize of basis number projects levels large ratio pipeline calls, are Our X.X remained bookings quarter second the a the in strong a right-hand pursuing we we side second prior the positive. Shifting use million, strong and gross has a which XXXX. similar continued of that year And we profit expect the the our performance booked have quarter-by-quarter can half on margins, book-to-bill trending commercial metric size teams half backlog to the because we our and and as prior prior quarter steady KPIs, they as as TTM a lumpy, at to large both in of $XXX be of communicated not in near-record of underpinning for the to approximately slide, trailing

that large of expect booked previously also last this the jobs We of share as large the second Todd second mentioned including that that a two the revenue very backlog be will a the quarter. half in year fair realized portion year, of in

Sales million turn about sequentially. X. record, the talk a sales let's we of X% up up second Now sales and quarter quarter approximately Slide year-over-year XX% new is $XXX for as to

$XXX formal performance results as While order are move experienced quarter, from in pleased even we not to are we been second the our enter growth have recognition revenue very the performance. sales experienced, of had purchase first have double-digit XXXX of our second sales is and in order results, customers to of we with on placement delivered million the first and TTM XXXX are could notification With select the projects from year. for strong booking total line the stronger sales approximately taking XX%. certain have to performance the the delays, with the year up XXXX, a longer CECO's I underway. With and of our quarter in am TTM currently and delays our in half it certainly pleased period, million approximately way XX% half half great we with ago which sales, year $XXX is

$X of largely turn initiatives. the margins, XX, on our we any were we Page margins project result The please $XX of greater execution, a to are efficiency improvement acquisitions, $X XXXX, delivered million share profit XXXX of basis, mid-XXs of million in tend and of of for is a EBITDA first a incremental gross half increased cover the conversion recent million million, for of Now to dollar additional frame. Starting for rate results gross back which profit result in book basis. operational sales additional to higher increased our XXX continuing target, $XX where fourth XX% level basis first increase and recall reinforces quite approximately will started and of approximately achieve And $XXX XXXX, and TTM million $X XXX%. On steady that's time gross of highs. a that incremental on a have to story path. and which of nearly level Margins margins or been a million quarter second and a million quarter $XX incremental and is XX% has XX% $XXX the that this conversion an margins, have as Also of you we on early X% realizing contributing and profit sourcing CECO the year. basis, are near approximately will on of for record brands short-cycle quarter of a on to year-over-year sales our historical get expected is quarter, of XX.X%, mid-teens conversation continuous profit. which trend resulting fourth the quarter and from keeping improved dollar a quarter where margins and our gross on track of with as Year-over-year earnings number improvements, volumes a periods increase revenues. Sequentially, in will which we in to signaled a the margin of improved higher a a margin the fantastic which a in margin second million in XX.X%, increase are right sales, an benefits improvement both points I

to EBITDA. Moving adjusted

approximately from benefiting in resulted our basis quarter This was and XXX million, second The expanding the respectively. conversion Second strong margins XX% a XX.X%. the year-over-year, sequentially operational performance. and points in record any quarter for XX% quarter, to incremental $XX.X delivered by record XXXX sales period in

sales, excellence in and annual of in certainly your approximately $XX incremental margin basis, as to million trend are drive resources targeting the million, XX% resulted target we resources growth EBITDA increase allow of benefits productivity resources XX% to active margin accelerate engineering was an about little that the to on drive expense. partially to conversion to sales us like adjustments attention and incremental rate, information an by of prior to and a is necessary periods. a XXX in we The integration On project G&A adjusted pressure of in that from from which back-office points increase on our our efficiencies and I'd and business CECO's upward TTM an XX.X% on operating sales the $XX.X acquisitions. Also, and continued start sequentially. margin TTM EBITDA investments system functional accelerated or bring achieve Our to our become processes, -- is and see of year-over-year upgrades basis points investment systems resulting quarter, basis our second providing G&A to XX merit XX.X% offset on higher

million paid quarter, international amount reduces corporate million up that of half structure, in and over first net $X period. That the cash uses. year, year-over-year. totaled the debt ago XXXX year-over-year the the reflecting level Slide hold support the decrease of meet IT review we buybacks lower the $X high XXXX liquidity. need quarter and approximately CapEx the on executed from Net our increasing remainder In and lower The of and and our of position million to CECO sustain from quarter capacity management. accelerated fully debt performance results implemented throughout was delivering of a confidence capital deployment the for in to decrease financial order in was of was cash gross stage metric turn basis in upgrades. concludes result to higher and year-over-year covers million to of $XX the in finished improve $XX.X quarter cash XXXX, level and our a capital down end, first quarter of working rates, back $XX concluding $X versus stock the to million balance The Todd our results. second structurally to first quarter, year-end quarter me investment. the year repayments net the a liquidity XXXX, aforementioned cash, million on from capital year-over-year, in a EBITDA we year-end year-end moving balance with like $XX frees $X approximately moved million CECO from quarter funded with and by $XX improved for million on from a the we with borrowings turn of half. In for our as half believe global million. million, year system by upgrades of by taxes a generation which the quickly Cash the which $XX of higher approximately continued $XX X.Xx cyber of other planned full and adjusted $XXX CECO's now Now including cash sequentially to X.X a my needs. the quarter growth, and investments up at with in for turn finished M&A revenue XXXX quarter This our million, XXXX of pooling benefiting will with slightly operations interest the in that I'd remarks. modest $XXX XX, leverage the ratio to up we million million from year-end give summary $X the the and his sequential our tenth moving downwards support cash we we'll CECO's outlook. And operations the of this approximately flat quarter. Leverage debt and improvements commitments slightly Cash million bank we and generated on

Todd Gleason

then quarter summary go into other to good financials our section year-to-date Overall, line of lot with second delivering the our also final and we number top respect our performance. line #XX. bottom A turn to growth the and details slide. Please and Peter. Thanks, sustainable signaling produced Slide results in our final to and going We're insights have also quarters for our a been to and of guidance.

bookings in project deliveries. and delays some navigated have We

to we are a jobs record definitely are We sales which we what in we still coming on jobs opportunities large a tremendous quarters timing feel great teams. We in and pipeline. results, financial leadership the cycle, closer continue project our which on power with look major produce industrial be margin energy air. horizon, the super we're is in is strong proving markets associated is our There for pipeline. but these many to of imminent. really forward to demonstrating to our We about the focus water sharing more industrial opportunities believe and have months is as in And the and expansion,

acquired at with its forward of these track prices businesses look growth how growth is to working pleased and record are have We proven share we of acquisition and of accelerating accretive we believe in pipeline EnviroCare, We strategic and and to businesses. recent leadership the maximizing then a advancing. acquiring team We investing our full excited are profitability M&A their the potential. EnviroCare,

full solutions are all a CECO protect believe our that the world our our have And result deliver year growth. million special people, or time providing members the you to this the to and over $XXX factors, of environment pleased at raised future guidance now to our XX% for few up to these of customers thank operator, to reflect with $XXX are view commitment open around that, our range And are to for and of the and million team a revenue between at our invest will protect to with we hard that industrial questions. protect conclude to of the with remarks. happy midpoint, back million As million, hand we equipment. And $XX a year. I performance, and I'll the it it any range up then up coupled working we second the to markets, we while each for strong between EBITDA midpoint adjusted $XX XX%

Operator

the comes Spychalla Our Craig-Hallum of Aaron Capital Instructions] question from first line [Operator Group. from

Aaron Spychalla

It more there's any maybe taking some question. up the year? opportunities of in still out me, areas in of expansion, kind Peter. Todd billion, driving just on on half for and that back in of sounds the Maybe there? the particular the morning, here $X those for little good confidence just some first bit the And like Yes, talk year-over-year. you transition and about order strength? energy delays Thanks to XX% pipeline then a of converting detail orders large some the Can

Todd Gleason

could for and talk organization. with that power-related nuclear. quarters to each it larger of for had important we consistently and are Good it bookings in opportunities focus attractive. XX in many is But continue quarter, power would the XXXX, Look, in super demands power, But or of big us our large on I we industrial cycle, pretty are aren't say of are $XX It other a respect and and would haven't a Yes. in with growing the and last and that be us, our and but again, satisfy jobs X.X also about renewables months, geothermal everything months that But question, mostly space, no there energy energy power been gas turbine down to announcing terms doubt certainly, quarterly transition customers or that that opportunities seeing we Aaron. the million we're it booking, jobs space. but or energy like the in seen slowdown globally. are quarter our jobs or we now mean go of performance seeing maybe announced. the sources. And end not have discussion, extremely large projects, been be in a what for receiving, We we pursuits fewer review. opportunities, sales million industrial is best refer for to doesn't that growth. the pipeline our are are in of of to drive that in Look, really for is the water our to air gas $XX have and in investments the each. the yet table the next between in whether on mentioning those the would the constant factor to us is analysis, pipeline XXXX set reason as largest already us natural minds opportunity XXXX, months in that multiples in I future say negotiation of say X These potentially, we But generally they to important dialogue

those our project largest would have areas So for where are we impact billion the $X sales big pipeline, probably of suggest in the us.

Aaron Spychalla

right. onetime? talk just you some you're solid there of early margin, in project quarter And execution, split All that can and just the too. mix larger of how the over there? about of then quarters about, kind about margin the And gross on between short-cycle few And thinking projects execute the anything the particular of talked next of another then then initiatives to cadence you you you're as some note kind maybe

Todd Gleason

make I'll certainly provide a Peter couple of a comments, will and Yes. more color.

just gross our management we've acquisitions So margin in we're project course, our of part for a portfolio. And of as signaling pleased. better and EBITDA excellence, investment been, higher operating results and margins core again, both and organic, positioning portfolio our

are quarterly now So really all and things EBITDA gross to great of those margins produce margins. starting

as important expect drop investment off. EBITDA community. to And think and of our can higher gross ability attractive the volumes revenue very down goes margins the little year-over-year will we of because to bit, the gross our the huge EBITDA and to a path the absorb. that us mean come those for for topics mix We and business certainly to volumes produce that That of discussion margins. expect margin expect EBITDA most margins, still but a them we G&A that's our on doesn't gross leverage in be expanding we margins certainly our expansion But a mid-teen consistently margin the have margins the revenue,

margins But keep half, great EBITDA productivity good as sales to continue in first margin and will driver going of gross bottom is mix. of drive us, to come year-over-year to having a our And again, line gross focus So we're expect expansion. for will higher a on the versus performance. the we go half margins the year, down but the do higher bit second business continue

Peter Johansson

little average margins, Aaron, gross cost fixed see with is projects or aggregate book lower large very the very lower me, profit but excuse historically with what we addition. come

And where of our operational of better margins And like we're consideration. to volume we track when so that typically. component to about we We and most efficiencies talk customers seeing would gross margin buying year-over-year. into is, margins all seeing more costs enhancement. are as up fast Actually, the and terms us from a teams what do those that that's contribution our sequentially and have numbers as are in the because executing And margins. profit degree, as we're powerful where seeing because project faster great a they to. across delivering move expand allowing And they contribution roll takes our their project regions internally

Aaron Spychalla

Right.

That sense. it you I'll taking Thank the Okay. makes over. question. for turn

Peter Johansson

mix large But is tailwind for X about these typical that last powerful a us. converts a it's mix Aaron to talk in driver when projects been long that and revenue and us that versus short Yes. versus periods we for has

Operator

Thank you.

next Markets. comes the Capital of Our from question Street Brown Rob from Lake line

Robert Brown

morning. Good

activity maybe this Just more the any seeing particulars the delay? delays. on project secular sort just are touch you wanted causing you'd of you to a of guess, and what the little Or that's -- each hoped? to bit timing relative the is did I kind project of

Todd Gleason

of of different to industrial signal important doing taking ongoing that those pipeline change $X investment of small a businesses it's that be we the those. The to much customers big anything or seeing over fact We're similar in the new -- a think expansion. at reshoring doing million we last economically and year. not the -- expansions seeing moving not the million So would other what that still $X we through and and then of or understand before. issuance by very in are We're thematic confirmed builds, sea general range. markets seeing say $X very notification that And when I small, type when a and we would purchase even million, order are industrial that projects support same risk, seeing the to were change bid or the are are We're talking course, view slowdown what speaking, maybe say we're these a so and $X a the and we're in and lot seeing global growing. and a would the as good million pace pace medium review, a

people we're go. However, very is resource seeing plan. in we while we're what a keeping hearing for think and I recruiting And fortunately, challenge, and and good larger ready a to people have projects, us,

all for to of and these projects suppliers, these and is However, that's is is larger resources of maybe not of always ready bit customers, hearing ready are the larger for waiting case projects. these these be to even little getting themselves a deployed be do EPC for work to the their with that their guess, of lots including go and, heavy their camps, delays associated creating to some suppliers, in projects what large the I firms, projects, go we're big install

in causing these So maybe one we a that little is I would if guess year, delays pause projects. certain months, several this and saying there's area been I for say larger think are certainly this availability we've and now resource that

jobs will going to potentially win. very be visibility for see time Now, we that there's said, an these including And a because number still bookings good to of into a year that Like there's oversized number companies I head this tell where a and projects. well positioned feel have probably a we to XXXX, we quarter large that ours. of means as we and

don't economic of lot there's a we look, think change. So

a to could rates be on pause maybe regulatory coming related waiting and associated with to even be fact, a the interest pause In associated commodity what see down. coming the could with costs there down happens front people election

those large taking projects to right amount the get organized. -- of everything things think they're taking are and these you the all just more I and mix, time complicated into bring they're So

Robert Brown

for about you. through sizes Okay. guess? does you? I And the of these of That are And time talked range range, of sort sense. think those you Could before then of projects. makes that Thank in the what flow you period projects remind how over drive revenue us size do I these the sort what

Peter Johansson

supporting customers backup million seeing gas plants conversions, a coal pipeline talking are opportunities, electrolyzer about now, in the power lot $XX about becoming energy and million now growing. to eye-wateringly The scope supply range. out data to was to of $XXX talk used of opportunities to of large. in And $XX We're the beginning hydrogen our million to we build and Rob, just size large we're million jobs with scale center $XX think supply large. we're

running. is -- say quarters, And for a They generate X runs multi-quarter as milestone what on recognize depending from about we is progression, think a over book manage them has X, consistently plant period. teams generally with quarter-over-quarter the and the But X, moving across And median we nice consistently commissioned a anywhere and so revenue sometimes the impact us projects on these a and similar gets our I up cash large needs. quickly we historically generally how follow regions. been project nice

Operator

next of ROTH. Sweeney question the from Gerry from comes Our line

Gerard Sweeney

Good for slightly everybody taking stick power else's, question. my Steve. since but just a to morning, going Todd, Thanks I'm different Peter, call. with

to But seeing there's actual can what cetera. there maybe up out not many the et since how out maybe some you really projects Just probably on there curious opportunity are be delays are are it resource as And many projects? projects understand start so then you an ratcheting there these even maybe there and good surprised margins to finally, would you? differentiates margin

Todd Gleason

We'll it. -- the with there. questions with start then the any do maybe go ability no, of it as or that great. guess, maybe and get company -- couple we to that's productivity utilize that opportunity, blend would pricing some of defend maximize make -- start, through associated all advantage projects A try sure our position taking to of answer of feel We'll It's of and want we're our volume our kind Yes. and we course, this. we we'll which, margin there's pricing leadership I to

that and think of size respect only very at pursue have maybe noise the nuclear could Xx years, less, markets. we and important we're in at power look projects. We -- said, to been to these last few number very opportunities X large pieces facilities certifications have geothermal, grown, separation, of provider So so acoustic more types a with But we energy-related we reference for provide those healthy look, I X large do they few a probably projects need say solutions sites, nuclear to of looking be filtration of a project decades well-positioned appropriate service complicated like the relationships work. competitors can equipment, from Xx over over emissions jobs our for for looking have number. solutions other that been and silencing, would typically seeing the and to areas those years, benefited of consider those as we and you would I now, where looking specific that we experience, few had over that the resources or And course, management unproven many models, for be the solutions would They for good. the not are us proven activity, months, the have next last have already of and not or dozen They're and like rewarded suppliers. power XX the they've large, types

again, that has in magnitude to sustainable terms be in And -- specifically gone of multiyear the pipeline. up the looks multiples and So we're a level. it of power,

power for management and so power it centers solutions, power, to optimistic X.X indicating acoustic doubled Vernova, in and online. well-positioned GE we for with have expand than and that's years others and the then XX more are opportunities that their And space expect our we tremendous that has to Siemens that investments have also growth resources. in are that think I capital our position with expanded Energy, ability providing other portfolio months, and a opportunities a associated acquisition seen see business amount. cetera, and extended certainly have we power-related we or ago are X.X of fair other talking our coming wouldn't with footprint its smart ago. in data industrial about a business now as are years that Wakefield the to et regions And international hiring backup investment solutions with in respect

yes, seeing the than So before. will a I and will I ago or of look, years And year would different ago. market margins think say, versus we're X gross vastly multiples be pricing

we have expertise I the don't where healthy. planning they'll We right our to focus. to we with an here. be get as get good very can think management. productivity, around jobs partner to to try to valued that logistics customers. our we in -- and that it. are if do want our an be price where projects, can scale large want we that projects sourcing, to can execution, price accordingly. is start our know we great And then to for these but be not have think position do we I think We ability for We a We're the and management, opportunity opportunity certainly project productivity leverage is areas ours us

for our some efficient our deliver benefits years better, think I versus pricing, think, operating margin us ability to our see just, past, a and execute But more for initiatives. for generate to additional productivity them. to which is through similar I organization, we're So expansion we customers, going always and maybe for expect we're own appropriate and

Peter Johansson

that on opportunities. X in include has say, of addition decarbonization screens recovered, shall pipeline Todd now electrification it's many goals, the project I the in is looking summary tap they're where goals And in support last Nuclear nuclear potential of area of radar as many all Gerry, didn't rebounded and one quarters, support or electricity sources his the reindustrialization. X to countries, to companies numerous to

Gerard Sweeney

the larger? Todd, talking size? of $XX Or what the million the recent getting that acquisitions, -- project million of of specifically project in share to is. terms Is $XXX I size project million you you're power, a some of is think, to when you're about more large definition now maybe million mentioned earlier more able $XX or your size maybe share around function project grew of that that wallet bolt-ons $XX to a gain pipeline, the from to

Todd Gleason

I'll all electrons. bigger gigawatts. project. the more -- the just all it every the bigger, say of I more probably It's about electrons, about producing machines, of It's last them at They're all said it scope the I'm quarter, quarter end until decade. a It's

our confident. we're we happen. dedicated East, our bumper great It's Look, do and But we've in invested great resources in a waiting we grown a very invested and think produced. to Middle India, being have as the they're sticker as employees. leadership, grown However, resources team,

and Korea East never in and we Asia before. now have Southeast Asia As that we capabilities had

continue capabilities. European and European, to we As more Western add Wakefield

in been et we've cetera. markets, so always North positioned well America, those US power, a especially few And of

$XX So yes, jobs these their acquisitions million would do for these expand million, that used pipeline. jobs, But $XX our have big been be to overall max.

wind and of but job. not scope backup also and have then $XX fired to other might been other that in applications million there's solar a is to application. the It's It peaker that singularly expanding gas, power $XXX focused really to coal the million. and power and natural Now converting have power

just sort Now demand of for are course, need need bigger, there's air tremendous And conditioning, they're a it. doing multi. centers digitization heating, and cycle. for comfort, Data et more of look, complicated These more cetera, a jobs. it's and

Gerard Sweeney

Got it.

it as we Okay. is, I too time but taken probably up a much have follow-up.

guys. thanks So

Operator

question. next for moment One you. Thank

from Jim line question next the Company. & Our comes of Needham from Ricchiuti

James Ricchiuti

Maybe morning. aspects. Thanks mundane of moving some the to more

these talked us? delays some QX? in slip up customer-driven could maybe Or do catch on for wondering, delays these size potentially if that to into of that QX? And And You you does about I'm you expect delays.

Peter Johansson

postponements. that's necessary that reaching freeze the quarter, third rolls to design Revenue due quarter to recognition-related fourth that a delays principally into either customer orders And to issue suppliers, subsequent customer primarily are of review, revenue periods. our approvals then purchase or level

revenue it's be that loss, we revenue And benefit will and quarter. the not that's deferred. third expect fourth So the -- those a so Jim, to potentially do quarter

to dynamics and a way. the means, portion half, more half, In produce all have naturally outlook will much it in -- back year to longer that customer we're XX% were the year, that, end of our of larger full that of of terms are recognized in planned any of second revenue. We the a we first that of a notification be from in to going the does XX% move of and by outlook this that these year that award, taking not terms much customers formal projects dynamic in see implies

James Ricchiuti

is seeing this the more you're And weighted the it's way given business, just even QX what... into year, just there Peter, the potential that

Peter Johansson

the in in QXs. they QX QX, pong operating large Historically, our in QX delivery X, business, our heavier. our and to that typically It and lightest have we back norm with and forth. they leads also heaviest our But EBITDA do QX fourth us Qs period. ping maybe being -- is have being X business has lighter had heavier

James Ricchiuti

XX% And annualized on similar more issues to linear? $XX of back is that, about XX%, the Biocare, congrats Is your million half? mix it of that in revenue. mix million where revenues $XX Or come the

Peter Johansson

understand of tends well. component, small be weighting now, to evenly it with which processes their as and business, understand .that to a got kind and they've aftermarket, recognition came as is service as No we project business steady more that revenue distributed to we that's steady. XX% a diligence very And

was EnviroCare felt quarterly though down the not to revenue XX% So about it's balanced didn't third we're overall revenue. can their few or year. not that X -- drive from year. -- contribute, our points we but fourth up by it's of quarter, to going we of that's going And in It a swing of in across is months it where evenly revenue the revenue What and balance change significantly. have first quarter will the the talking

But shift. exacerbate that it the won't next year, So will have impact. demonstrable a

James Ricchiuti

the picking kind could been environment general, deals now question, characterize just like up attractive. would right that more this. pipeline. of last It's and you in of -- quite to And the your potential how they do with be things the What's these M&A look smaller quiet,

Todd Gleason

to But we pricing work asset them is a feel lot process. as active. whether very is even higher continues than is in corporate sponsor narrow on or we active, We're The the very, markets the -- positive it's but carve-outs. pipeline quality very or higher year we a on is the of us. businesses The selective. We our and down inbounds, owned high, through private environment few environment activity much work the impress ago, businesses than quarter. first The very valuation very

Peter Johansson

And have those and have our these of discussions. and done we continue say then we'll remain a a -- building job so great done job all of leaders great relationships. to that said advance is We positive. we've And business we

obviously model, forward. have we'll and makes our opportunities we We've growth. it fits sense our if them, together to a our that transaction, can We acquired. all businesses transaction us, it operating for if invest grown. that win it exciting create believe and culture very We've in company a we've win-win of if win-win And acquire find we then we look fits and we'll that the we'll going in invested

also We we'll a it's cultural very if away fact it excited win-win opportunities. consistent us number I fit, those bit to have place friends. we'll a had or we're And about year, the time of win-wins if with we've away and a good are isn't walk as not that walk those think our in of it's a get where taken which we going forward. the to, the little pipeline in is last why But

deviate not And don't and -- suggesting that our acquisition, not other so that pressure companies feel to do selective. that's We're be our say strategy, to as make focus. let's feel from where to we can people I an the you close transactions, but we happens going it that can just just imagine. that,

Operator

question. next for moment One you. Thank

comes question Northland the Brooks of Markets. next from Bobby Our line from Capital

Robert Brooks

morning Good guys.

forward. I the what margins traditionally... be that the remarks, mix you is that contains? the mix know know I towards tilt mix going forward, margins. in commentary, is guys So would stuff to improving that, tailwind just But like improving for for and business going a short long-cycle you called out an called you them given -- Could it cycle just that more tailwind seems discuss so prepared going improving a

Peter Johansson

Bobby, the that I us the half. was statement first benefited in think it

Todd Gleason

year-over-year, look -- answer of all right on I With do think sequentially, to guess. themes, you if respect mix, if I Bobby. the you're question, yes, just the -- but improving to Well, let's well, so the

with So the was first comment year-over-year. of all, associated

to year our be remains half benefit. will that if continue you the that and third have so the expectation that a the that, generating at is mix first year-over-year and productivity the and the look And been fourth quarter, in of the investments we

long yes, have margins a percentage short terms typically short discrete them. that in of And larger year-over-year And also is we going the are in not we right versus dollars. the a our mix things. would And cycle still have cycle, but of that's long-cycle you're to cycle that so higher in a question factor which benefit, we also say have of number businesses more of might

jobs margins Transcend in, in building you parts, of say, when let's now ongoing. that as separation more years, So over water replacement look are with great and you industrial inorganically some -- aftermarket consumables filtration more and cetera, et think the at we've about the businesses organically last water few with higher industrial that been just and

those things trend up. of All

applications look more If higher are the but small like you little et for a Those even the might half, of in that our second areas Navy, at be bit margin. Defense, entire Department weighted P&L, are for US cetera.

example. And Acoustics Thermal in of higher other sweet then that applications, that and business, average long-cycle still winning us our been or have margin for smaller cycle, size we in Some jobs they're the spot that the energy of long somewhat versus for is jobs. in while are higher margin they're

But main results, our creator. It we not we're [ a modestly is contribute here. is guess, margin Again, So a the sized bit year-over-year one margins it's company. And to expansion think much quarterly don't very year-over-year. quarterly but X It's and to our that's we're main bit factors our value focus. and being of little in -- think We Bobby, is to of thing, certainly driver XX-month ]. cycle number that quarterly we sequential keen revenues long my I produce as a not are wheelhouse still. I more them our still answer of organization very each a

Robert Brooks

kind Understood. of color. great that. And That's just on piggybacking then

You mentioned kind what -- on? positioning so? higher the margins? in that mean higher the how portfolio of just better Is for plan that doing one just portfolio Or for And margins of you key. margins stuff you gross terms the Aaron's your is does of maybe just in better question positioning CECO explain portfolio guys you does could are on -- is to on the touched positioning higher answers that better what that

Todd Gleason

Yes.

that now model. And of safety, short are that's adopted think lean history getting it facilities, and So all excellence. adding think year, probably people, you operating part the Look, and all quality, cost. We've And operating time our is answer. the I corporate asked playbook company's I pricing, more it think than of a chain lean be the signaled We these might prior in going camps at platforms been all model in -- that answer get investing well, we'd over give of as -- that to key to we drive redundant and if last yes. consistently did resources it's we our getting the probably. expansion. across supply think the to our making classic even enterprise. much continue last I And resources components the we months -- is it's look, operating The delivery, to I purchases, are looking that X -- after over sure opportunities any to our lean margin of being at out more to had boot in our we've is

the bookings, up cetera. And small margin delivered things because even you're margins and we you're wins, eliminating than of these our have anticipated quality poor just in so eliminating show that scrap, you're et is rework, that in if cost improving higher we it the

and is a bit and and we singles double-digit on slightly was why years, and towards and a home said productivity organic. that is us, more people heavily people to margin year, our outlook low have differently a the more growth, which expansion. is still mostly as including for So acquisitions, pendulum specifically weighting last this organically year about bunch expansion. We use is margin visual on for doubles, more on little inorganically, over we few like incentivizing incentivized growth margin have the this it's more of not driving which I a that runs, expansion, whole it But incentivized leaning growth the growth,

us, it there, it So, advances. it Bobby out change. for doesn't for is evolves, a playbook that radically It everyone and

after so are the today we of sustainable to and those just and And apply win, organic be do that that playbook going slow, the build evolution to of EBITDA and go to ensure to believe race activities continue steady, on overnight. is a try do year margins. will every incentivized of which to our we pressure our expect our to delivery inside organization It's on going our this margins, the not inorganic we're more advancement ability those of EBITDA to are mid-teen those to quarter. it But things we types XX%

Robert Brooks

one last me. just for And

or normal much how is much in that the billion, booked that mentioned -- pipeline? that much how you is delays projects just on the $X of pipeline a now just curious billion, been that decided. So new likely have to last million entering you how increase $X of And due in is we circumstances is I already $XXX increase the have that's guys from call. was that at called would the have out jobs

Todd Gleason

the at have had have we the that second -- it have to with now would much expected quarter. million of And least be been hoped year. $XX million Well, had They extended have at been go and of year, but been they we've had It of in worth expectation unlikely just of jobs. a we could the $XXX into an -- been the the be could might very worth let's have in half high. second we've could jobs beginning least that

up is $X can us Industrial think in also have having ago from open that in XXXX billion, in think before, our to that markets that are various great general but and And than Water, getting then year another like some because little and bit XXXX, less point we there million would mentioned billion, that on $XX back which project sites they're to things specifically industrial. worth I pursue. pipeline a a I we to us global coming and frankly, of sort the had pause, now for So end expansion reference that's a markets we those. But of didn't we XXXX just that that $X.X number we've a know go say India

million associated second XXXX. rest $XX or roll back coming new in some here. ebbs into say what the but there's us million into jobs markets continuing to out. is to of with I'd as But The $XXX certainly pushed half flows could So expand be and year, kind is geographically it we markets just of now just other into favor the

Robert Brooks

Terrific. Thank call. I you Appreciate I'll the return back the time. queue. the to for

Operator

Amit Dayal H.C. next from Our comes question line the of Wainwright. from

Amit Dayal

should Thank accelerating about respect think is through how set we environment environment interest with With higher anticipating, lower, interest this Like bigger interest the you. how Good you've be how rate business does guys. sales cycles morning lower to may you're you? should rate hitting about very for Like change, rates it? we you? think done opportunity this potentially even that for well

Todd Gleason

regulatory the think yes environment that be I'm It's going or be lower would customers to No, think just just to no, it's more driver. their yes, situation. If no, our do a had that great a tempted I if interest circle don't the up their higher commitment to not. has know decisions, of don't purchasing question, or or rates their CapEx, question. interest to a investments then equipment with because or circle rate it's the to protection declining, growth that interest I yes, I their safety rate their to industrial went if and some were anything or of that. rapidly much the lot and there I

They have They some the future the topics an going markets of some could program, associated there down. I of the change or that happens the So stability there there's a not maybe said, be But that of and I administrative cetera. of and of of our associated rates. budgetary rates a use interest -- delays at lot are answer That are opportunities bit decisions. to materialized to as creating interest certainly et interest are word moment. some an think confidence think I is not come yet the is result with a the various with change interest to what the could a with in little the also policy see that pauses presidential interest election. rates be hate

in and least We And see influencing are are there certain but out we the material, incredibly not at factors hear They're them them. modestly decisions. so and certain moment they're projects that there.

but us, to for the do you figure that. look, high stable, as give rates, out if I us So it's interest always what CEO, say we'll with

high us You to commodity that. what costs, give they're do out We'll figure but stable. with

feels that do out things interest when that. that's If we'll great, lot or typically as it creates happen and creates pause. It what are uncertainty all a and things. or the what's of going give the pause. to us a moving It see us lower high figure lower even result It's commodity better, that rates is costs, with to low, to of around isn't you waiting

things And more and it if anxious announcements we're anything, become just for decisions to finalized. is so for

what great down and so that various et start plan to with then the come the would are exactly that. wants outcome would if be tell And rates, they're great. we can restrictions, policies going for cetera, the to know going Fed to us be we just of all interest that to pipeline, do because If

So up being XX next for X stable of factor. I the going over more the months most more what's the us, is market a end probably to interesting of knowledge to think

Peter Johansson

about market CECO. that lower positive. interest Todd impact. about talked Amit, rates, the to are the talk on I'll stable impact

rate investments We have Every cash have is burden improvement acquisitions, lower a debt. us the XXX% more certainly for our the alternate we reduction EPS is of as investments, credit more to an generation. It rate interest variable we in the in the cash. cash and our uses consider positive more new likely we The interest that growth of additional environment or makes have, in are company.

our So to but it's Todd's a don't I point, swinger. impact, The big I positive, define. macro can impact we micro think have

Amit Dayal

much. so you Thank guys. color the Appreciate Understood.

Operator

question-and-answer the our Gleason conference would to concludes remarks. Todd for session. I back any over This you. to turn closing Thank like

Todd Gleason

Also, global investment Thank we customers, environment our deliver in for to know I'd and out again, importantly, at for International of working our in and with CECO being your continue value their everyone thank to to you active protect forward the investors. going protect the with to welcome questions, be teams, and the people, our available to you, Team to course, thanks working and and each as like they of and continue information interest EnviroCare industrial equipment. to the closely. We're customers' to looking team once our protect you today. Also, great like CECO, incredible getting in to great

as out you meetings investors August, opportunities across So see as at various have and Jefferies Industrial September. be the one-on-one with Conferences Midwest in late hope the well other we country in in we Lake to Chicago times. as present the Street and in Conference We'll at to IDEAS meet

see to you if hope in we we're So town. your

and like and a or you'd we to contact time If week, again, your conferences out be on representative discussion. happy hope I great your please call. you those have set at day, we'd great that, meet a up appreciate, to or us, the to reach a With

Operator

The conference attending has concluded. you now today's Thank presentation. for

disconnect. now may You

CECO Environmental (CECO) 30 Jul 242024 Q2 Earnings call transcript