CECO Environmental backlog tops $1bn as data-centre orders surge
CECO Environmental Corp. has reported a record first-quarter order intake of $449.5 million, up 97% year-on-year, pushing its total backlog above $1 billion for the first time in the company's history. Revenue for the three months to 31 March 2026 reached $205.9 million, a 17% increase on the prior-year period, while adjusted EBITDA rose 46% to $20.4 million, reflecting a margin of 9.9%.
The Addison, Texas-based industrial clean-air and energy-transition specialist attributed the surge in bookings to accelerating demand for natural gas power infrastructure, driven by the build-out of data centres and AI computing capacity worldwide. Chief executive Todd Gleason said the momentum had continued into April, with the company booking approximately $450 million in additional orders in the second quarter to date — including what it described as the largest single natural-gas-power order in its history.
Record backlog and raised guidance
On a GAAP basis, CECO reported a net loss of $0.4 million for the quarter, compared with net income of $36.0 million a year earlier. The prior-year figure was however materially inflated by a $64.5 million gain on the disposal of its Global Pump Solutions business, making direct comparison misleading. Stripping out acquisition costs, amortisation and other one-off items, non-GAAP net income reached $13.9 million, up 297% from $3.5 million in Q1 2025.
The company raised its full-year 2026 revenue guidance to a range of $940 million to $1 billion, implying roughly 25% organic growth at the midpoint, and lifted its adjusted EBITDA outlook to $120–$140 million — up approximately 45% at the midpoint. Free cash flow guidance was reiterated at a minimum of 50% of adjusted EBITDA conversion, though Q1 free cash flow remained negative at $(15.7) million, weighed down by a $103 million increase in accounts receivable as large project billings ramped.
Gleason said gross margins contracted in the quarter as expected, given last year's disposal of the higher-margin pump business and the completion of lower-margin work booked in early 2025. The company expects margin recovery through the remainder of 2026 as higher-margin projects in the backlog convert to revenue.
Market context and the Thermon merger
The results land at a moment when demand for industrial power-generation infrastructure is accelerating sharply. Hyperscaler data-centre expansion and AI training cluster build-outs are consuming electricity at a pace that is straining grid capacity in the US, Europe and parts of Asia-Pacific. Equipment suppliers positioned at the intersection of emissions control and power generation — CECO's core territory — are benefiting from this cycle alongside gas turbine OEMs, heat-recovery specialists and grid-interconnection contractors.
CECO's pending acquisition of Thermon Group Holdings adds further exposure to the data-centre market. Thermon recently announced orders for its liquid load bank solution, a product designed for data-centre commissioning and power testing. CECO said the combined entity is expected to close in June 2026, subject to a stockholder vote scheduled for 27 May, with the registration statement on Form S-4 already declared effective by the SEC. Management has guided for at least $40 million in cost synergies from the combination.
The AI and data-centre infrastructure spending wave is prompting a wave of industrial M&A, as larger diversified industrials seek scale in power, cooling and emissions-management subsystems. Buyers will be watching CECO's ability to integrate Thermon without disrupting its order-conversion momentum, and whether its record backlog translates into sustained free cash flow generation over the coming quarters.