CECO Environmental (NASDAQ:CECO) reported record second-quarter results for 2026, citing accelerating orders, a growing backlog and early cost savings from its acquisition of Thermon, which closed June 1.

Chairman and Chief Executive Officer Todd Gleason said second-quarter orders reached a record $799 million, while quarter-end backlog exceeded $1.8 billion. Revenue totaled $285 million and adjusted EBITDA was approximately $40 million. Reported revenue rose 54% from a year earlier, while adjusted EBITDA increased 73% and adjusted EBITDA margin expanded about 150 basis points to 14.1%.

The reported quarterly results included one month of Thermon financial performance. CECO said it expects margins to improve further as it receives a full contribution from Thermon, realizes integration synergies and converts a growing proportion of its backlog into revenue.

CECO booked approximately $1.25 billion in new orders during the first half of 2026, up about 150% from the prior-year period. Second-quarter orders increased 191% year over year, while the company’s quarterly book-to-bill ratio was approximately 2.8. On a trailing 12-month basis, book-to-bill exceeded 2.

Chief Financial Officer Peter Johansson said backlog reached $1.82 billion at June 30, up 164% from the prior year and 76% sequentially from the prior quarterly record of $1.035 billion. Backlog has increased for 12 consecutive quarters, according to the company.

The company said power-generation-related projects accounted for approximately half of its second-quarter-ending backlog. Industrial air and water projects represented roughly 25%, with the remainder tied to natural gas and natural gas liquids infrastructure, hydrocarbon and chemical processing, and other energy-sector activity.

Gleason said CECO’s sales pipeline now exceeds $8.5 billion, compared with about $1.5 billion in 2021. He cited demand across power generation, semiconductor and electronics production, natural gas processing and infrastructure, industrial water, industrial reshoring projects and data centers.

Management emphasized that its backlog is supported by binding purchase orders and customer project commitments. Gleason said the company’s orders typically arrive after customers have progressed projects further through development, often with permits in place and authorization to begin work.

Vice President of Corporate Integration and Investor Relations Marcio Pinto said CECO had captured approximately $13 million in annualized net adjusted EBITDA savings during the first 60 days following the Thermon acquisition. That represents roughly one-third of CECO’s $40 million synergy target.

The early savings were driven primarily by reductions in public-company costs, including headcount, board and public-company-related services, along with additional actions across facilities and departments. CECO expects about $5 million of the annualized savings captured so far to be realized in 2026 adjusted EBITDA.

On a total cost-synergy basis, including stock compensation and other items not generally included in CECO’s adjusted EBITDA, the company said it captured about $19 million in annualized savings. It incurred about $21 million in year-to-date costs to achieve those savings, mainly related to change-in-control provisions and accelerated equity vesting for former Thermon officers.

CECO expects to capture $17 million to $20 million in annualized net adjusted EBITDA savings by the first anniversary of the transaction, or about 45% to 50% of the total target. Pinto said the original $40 million synergy objective “remains firmly intact.”

The companies have also identified more than 100 commercial opportunities across the combined portfolio. Gleason said more than $500,000 of Thermon products had already been included in CECO power-generation projects. He characterized the amount as a collection of opportunities across projects rather than one contract.

Management said Thermon’s thermal-management products can be used in CECO projects for applications including heat tracing, maintaining ammonia at appropriate temperatures in selective catalytic reduction systems, and helping protect components from freezing or corrosion. The company also cited data-center opportunities for Thermon’s liquid load-bank and heat-tracing products.

CECO’s adjusted gross margin rose sequentially by 264 basis points to 33.7% in the second quarter. Johansson said management expects higher gross margins in the second half, supported by larger projects, higher-margin backlog, operational-improvement efforts and Thermon’s margin profile.

Sales engineering and general and administrative expense was 22.4% of revenue, down about 400 basis points year over year. Gleason said roughly two-thirds of that improvement resulted from expenses being held flat or declining relative to revenue growth. He said CECO does not anticipate the expense rate increasing, apart from its ongoing migration to a single ERP platform.

Adjusted free cash flow was approximately $53 million in the second quarter, or more than 132% of adjusted EBITDA. Year-to-date adjusted free cash flow was about $38 million, compared with a year-over-year increase of approximately $56 million, according to the company.

Gross debt rose approximately $523 million from year-end following financing for the Thermon acquisition and related costs. Net debt increased $495 million, and CECO ended the quarter with a leverage ratio of 2.7 times trailing-12-month bank EBITDA. The company said it paid down an additional $39.5 million of gross debt by July 31, reducing gross debt to $692 million and moving toward its targeted leverage range of 2.0 to 2.5 times.

CECO raised its full-year 2026 outlook, projecting revenue of $1.3 billion to $1.375 billion, increasing the low end of its prior range by $25 million. The company now expects adjusted EBITDA of $200 million to $225 million, lifting the low end by $5 million.

The outlook includes approximately $5 million of realized Thermon cost synergies during 2026. CECO continues to expect mid-teens adjusted EBITDA margins, adjusted free cash flow conversion of at least 55% of adjusted EBITDA, and full-year orders to exceed $2 billion.

On a pro forma calendar-year basis that includes Thermon for the full year, CECO estimated revenue of approximately $1.5 billion to $1.6 billion and adjusted EBITDA of approximately $255 million to $280 million.

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.