CECO Environmental’s third quarter results were marked by robust sales momentum and a record-setting backlog, yet the market responded negatively after the company’s full-year revenue guidance fell slightly short of Wall Street’s expectations. Management highlighted strong demand across power generation, energy transition, and industrial water sectors, pointing to a 64% year-over-year increase in backlog and 46% revenue growth. CEO Todd Gleason noted, "Quarterly revenues came very close to eclipsing $200 million for the first time and produced an all-time record." The quarter’s performance was also shaped by continued expansion into new geographies and a healthy mix of mid-sized and larger orders, though some pressure on gross margins emerged due to project mix and seasonal dynamics.
Is now the time to buy CECO? Find out in our full research report (it’s free for active Edge members).
CECO Environmental (CECO) Q3 CY2025 Highlights:
- Revenue: $197.6 million vs analyst estimates of $190.6 million (45.8% year-on-year growth, 3.6% beat)
- Adjusted EPS: $0.26 vs analyst estimates of $0.25 (4% beat)
- Adjusted EBITDA: $23.2 million vs analyst estimates of $23.59 million (11.7% margin, 1.7% miss)
- The company reconfirmed its revenue guidance for the full year of $750 million at the midpoint
- EBITDA guidance for the full year is $95 million at the midpoint, above analyst estimates of $91.35 million
- Operating Margin: 4.8%, in line with the same quarter last year
- Market Capitalization: $1.85 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From CECO Environmental’s Q3 Earnings Call
- Robert Brown (Lake Street Capital Markets) pressed for details on the timing and scope of large industrial water and power projects; CEO Todd Gleason explained that most near-term opportunities are in the Middle East and Asia and depend on customer decisions.
- Aaron Spychalla (Craig-Hallum Capital Group) asked about accelerating order activity in power generation related to data centers; Gleason and CFO Peter Johansson responded that the pace is robust but not accelerating, with a multiyear cycle expected to drive sustained demand.
- Gerard Sweeney (ROTH) inquired about opportunities arising from disaggregated power trends in data centers; Johansson noted that CECO’s participation depends on the technology deployed, with more opportunities if small gas turbines are used.
- Bobby Brooks (Northland Capital Markets) questioned assumptions in the 2026 outlook regarding macroeconomic conditions; Gleason replied that guidance reflects a stable environment and that their core markets are relatively insulated from consumer sentiment shifts.
- James Ricchiuti (Needham & Company) sought clarity on gross margin fluctuations; Johansson attributed third quarter margin contraction to a project closeout and seasonal effects, and noted that a mix shift toward larger projects may further impact 2026 margins.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will closely monitor (1) the conversion pace of CECO’s record backlog into revenue, (2) the timing and scale of large project awards in power and industrial water, and (3) the impact of cost-reduction initiatives on EBITDA margins. Execution on cross-selling opportunities from recent acquisitions and resilience to external risks, such as tariffs and inflation, will also be important indicators for future performance.
CECO Environmental currently trades at $51.52, down from $53.33 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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