CECO's Thermon-Fueled Supercycle: Record Orders, Synergy Capture, and a Data Center Pivot
Q2 2026 marks a step-change: $799M orders, $1.82B backlog, and early Thermon synergies are rewriting the growth model.
CECO · Earnings Call · 2026-08-10
A Record Quarter
CECO Environmental ended Q2 2026 with numbers that would make any industrial CEO smile.
Simply put, this was a record-setting quarter across the board.
The company booked $799 million in orders, up 191% year-over-year, and ended the period with a backlog of $1.82 billion — up 164% from a year ago. Revenue rose 54% to $285 million, while adjusted EBITDA jumped 73% to $40.2 million, lifting the margin to 14.1%, the first quarter with mid-teen EBITDA margins.
What's driving this? Two intertwined stories: the Power Gen supercycle and the recently closed Thermon acquisition. The integration is moving faster than expected. As CEO Todd Gleason put it, “We have already captured approximately $13 million of annualized EBITDA savings in just the first 60 days” — Todd Gleason, Chairman and Chief Executive Officer · 2026-08-10 — roughly a third of the $40 million target. This is not just cost-cutting; it's opening the door to commercial opportunities across a combined portfolio.
Thermon's Data Center Advance
Perhaps the most intriguing development is the entrance into the Data centers market through Thermon's specialized products. CFO Peter Johansson described two distinct offerings: “Thermon has 2 distinct product offerings that are actually procured by the data center developers and installed directly into the data center.” — Peter Johansson, Chief Financial Officer · 2026-08-10 The first is a liquid load bank used to test cooling systems; the second is heat trace technology for structural stability. These are high-margin, quick-turn opportunities that CECO's legacy business never had access to — a genuine pivot.
The synergy story is equally compelling. Management highlighted early cross-selling wins, with Thermon product solutions already embedded in over $500,000 of CECO power generation projects. This is the beginning of a partner-selling model, not just cross-selling. As Todd explained, leveraging visibility into billions of dollars of pipeline allows Thermon's heat trace and thermal management solutions to be spec'd into projects they'd never see otherwise.
The Road Ahead
Financially, the transformation is visible in the fundamentals. Total revenue has climbed from roughly $75 million per quarter in 2020 to $750 million in the latest quarter (annualized run-rate), a seven-fold increase. Gross margins expanded sequentially to 33.7%, and the company raised its full-year guidance to $1.3–$1.375 billion revenue and $200–$225 million adjusted EBITDA. Cash flow is improving too; Q2 adjusted free cash flow hit $53 million, 132% of EBITDA.
But it's worth noting that the stock, at $2.9 billion market cap, trades 28% below its June 2026 peak, even after the strong quarter. That may reflect investor caution about leverage (net debt at 2.7x pro forma EBITDA) or the sheer pace of expectations. Still, the order book provides rare visibility: “Our backlog is firm and supported by legally binding purchase orders and project commitments with permits already obtained by our customers.” — Todd Gleason, Chairman and Chief Executive Officer · 2026-08-10
This is a vastly different company than the one that, a few months ago, was still “getting out ahead of this” — Todd Gleason, Chief Executive Officer · 2026-04-28 on supply chain and integration preparedness. The record orders, the early synergy capture, and the data center foothold all signal that the Thermon acquisition is already compounding value. As Todd said in the prior call, “Low-hanging fruit exists.” — Todd Gleason, Chief Executive Officer · 2026-02-24 In Q2, they've clearly started picking it.