CECO Environmental (CECO) 5 Mar 242023 Q4 Earnings call transcript

Good morning, and welcome to the CECO Environmental conference call. [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.

Thank you, Kevin, and thank you all for joining us on the CECO Environmental Fourth Quarter 2023 Earnings Call.

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

is please Steven, to interest and quarter a with an would, for we an to Slide that our delivered your Earnings Thanks, support.If tremendous Full outstanding you and #X, going audience, you continued Year and to start and thank entitled full which XXXX I'm QX turn Highlights. overarching year. comment

the in industrial The of quickly and slide.On recent records compares the review of year slide, XXXX, positions against financial our of side guidance, course, even With provided key the air, are November We most accomplishments slide, of of our the XXXX. a we that right side year transition. left that, we the our I to results, water, in leadership more but proud which full will in full list review. the number industrial energy let's excited advance

targets financial our records the the we or during we release, as outlined exceeded fourth year.As each press As in financial key check achieved, indicate, marks multiple green today's we quarter. the of closed delivered CECO

full Our growth, global teams year continued strong day. delivering is quarterly result showcased our and a financial world-class for our customers of performance every which

history. in backlog and to adjusted solutions some compared highest and full The quarter I the meet review performance.Now sales, last in company year The revenues, our of as exceed fourth when We let's continue processes year-end those some the customer profit, you, of company's Backlog, delivered our captures requirements our invest or our history. our that pleased quarter XX% steady that year. $XXX highest ensure to December represent sales their Thank QX we sales year, XXXX, in EBITDA levels with maintain highest the people, and period and share is growth.We quarterly was also dollar delivered so achievements our Team focus, your the quarter for we prior for to for accountability the respect XX, the last to up and needs. on history. was to continue our to section company's customer-first slide in the record in highlights. this gross fourth million we same of left of am CECO,

trajectory. our detail solid our ensuring expect bookings to great that we The billion, With growth. our of a X.Xx.So year businesses our has continue soon.Switching which pipeline overall transition execution mid-cycle of another as deployed announced guidance, to full towards the as I to in We growth to our record book-to-bill significant approximately our visibility, with been XXXX $XX for more million a strategy, orders raise it year-end much acquisitions. the Even to taken maintain year the as was our in completion of solid and yielded journey. us capital sales strong steps, combination being in we gears gives transformational continue CECO's and from short, performance to targeted it of more in confidence short three year investment approximately XXXX and $X.X very over backlog drive pipeline well we sales, previously our will the portfolio cover of sales of

CECO's market We and they also given strong new the are leadership. deliver we XXXX few review XXXX, free maintain minutes. cash of a further we very quarter and let's very performance results. completed flow healthy financial detail as year snapshot round these talent, delivered, and to will financial Slide of fourth and we more a while pleased X many out, figures with technologies, Peter metrics a top-notch in the financial transactions sheet.Now adding continue balance our in outstanding full to well-positioned in please turn And cover

shift which highest our we in bit Internally, results.The growth have quarter highest XX%. CECO's areas. full of history, year been $XXX However, company's a our of continuing our XX%, CECO, the we XX%.As producing mid, short-cycle right year annualized slide, I of bookings as a million steadily, year XXXX, orders focusing definitely spend focus little XX-month the deliberately global outlook a full this trend the fourth let long, a me annual to phenomenon, influence drove that bookings. year-over-year demand growing many for and mix growth there orders will audience, are of a not of timing of full sales. slide a year-over-year orders the bookings, the reminder highlight CECO's caution $XXX very more XXXX, the the quarter an on which year on sales order, few of since will levels but on just into the level because million of left panel are financials, time of and which all factors including also continuation of convert provides growth, a covers rate of -- of was customer of strong. XXXX the against stick half over to and side market results.Sales to rather of so fourth a I is quarterly mostly Peter positive represent as And which change outstanding always, follows snapshot second on full the CECO

Additionally, any level company's mentioned quarter in quarter previously, I record as a for the were fourth history. sales

For approximately This year of year-over-year. for the increase million year XXXX, EBITDA organic full $XX margins of sales approximately produced was adjusted basis growth EBITDA, year-over-year. year adjusted an points the up XX.X%, of XX approximately XX% XX%.Full was result

year item a points, basis would XXX a if for have XXXX. reminder, As in insurance full expanded favorable margins not

we top-line growth.Adjusted EPS expect $X.XX to conversion expense. the higher higher future full expect up Additionally, investments, off annual EPS year as level approximately of versus on deliver G&A XXXX, bit, we our will overcame $X.XX in year XXXX interest was our of a which modestly,

in Finally, recall, of that, million cash saw very XXXX managed generated cash negative half, to about if as flow well. the we free we cash in free flow, the $XX.X start of capital delivered $XX working you slow second We year. a QX.In we overcame million

organic Our our doing a great programmatic job that disciplined on are M&A. to allows strategy businesses driving focused maintain allocation which and working capital growth capital, us

previous as new our we to slide, tied outlined shortly transformation. mix, results.Now the that transition earnings this portfolio, how transformed capture conclude shorter to been #X. cycle So we of have articulated, and joined long we very help ongoing after outstanding on CECO, markets.Our was presentations, portfolio, turn introduced records our well had and several of percentage cyclical over business. business which cyclical In past strategy please I heavily slide, In that to to tremendous Slide our high-level cycle a long XXXX, was sales this cycle have years. energy reduce percentage to just a investor We increase goal and mix dependent legacy from to as

XX%. slide transition, the while water shows, balanced. our Industrial approximately accounts currently is air each for exceptionally are As energy current industrial and portfolio XX%, around

XX%. has is period. also have compared increased performance.Our higher are occurred, have our we and This approximately short-cycle XXXX, backlog growth XXXX eye-popping transition levels in sales our while an full XXX%, to when over same and that XX% to sales, year up tremendous delivered We

Since and outstanding management, capitalization joined I company. value can is shareholder shareholder have that when you which assure Importantly, we has CECO mid-XXXX, market XXX% delivered of growth. in price value. stock delivered over the I with on the noted seriously.It Fortune rewarding one also is be corner as recognized very Companies, to right Public We aligned Magazine, by the very as shareholders. Successful top take slide. this of is both of America's Most

are employees proud partners our Our is global and recognition this so appreciated. of success,

through comments a on to we our few deliberate Slide investments all I'll read outstanding growth, to go points. there. advance going the #X, M&A.I'm and portfolio, to but in organic not let's programmatic make expect We continue deliver while

deliver to and we and articulated feel our drive strategic slide delivered consistent our First, a returns, we we commitments. very shareholder both would tactical, and with believe introduced objectives that transparent we steadily few have We have and goals actions, on we our a similar ago. growth been transform portfolio.We also very while years

While challenges, to the we left actions expect expect accomplishments, long-term value to other and intentions.From ongoing would our growth, updated strong this drive slide, headwinds, high-level foundational we as in to we we to did to summary, our attention you and turn a constantly and XXXX, goals market right, represents our do, we adjust of build trends, maintain have shareholder key said to to we what and off, creation. similar our

continue These result, balance performance, in well initiatives, lack and initiatives, of the sustainable drive talent, excellence, a high maximize our we to performance.Each longer-term as better word, programs, short utilize are we of excellence, heartbeat, ongoing ensure capital real Our medium-term as future operational to capital, to positioning along our investments, operating commitment we to to requires model. commercial returns. these allocation culture to of a ensures and for CECO with build are of for also investments that

as #X on As granular turn progress please position updates for years, guidance. review let's details on future programs initiatives.Now provide our will well and to as Slide against other and we we commitments, these more

and update pleased I as to our that As remarks, we earlier press to are guidance. an full you we share today, in release earlier year mentioned saw in issued my our XXXX

we renewable continue to excuse and water, and governmental will investments with in to pause create transition forecasting there benefit, pipeline, respect understand time. and CHIP infrastructure to sources, are position me, market guidance with full as the this a we such positive this at XXXX sales industrial Act record our to and articulated, a we and expect energy better environment, very specific we confidence outlook year production, pipeline X%. global of and investments, average by sustainable our great us full with greater book-to-bill gives unique growth, consistent orders, community. With unknowns mega for to growth.CECO's I to programs a fueled, in transition believe While respect than With sales always investment XXXX governmental others.The new raise, being reshoring the to maintain maintain just CECO, in combination backlog, leadership industrial from industrial bookings.As the the visibility these remind strong we energy year dynamics air, is investment always than dynamics, themes coupled market in robust

ebb for expect a flow book-to-bill. Our bit, a quarterly drive might and levels but positive year, to full we bookings the

increasing year, million, growth year-over- and the and are an midpoint.The of We the revenue range. high our to to full $XXX representing XXXX and $XXX $XXX low, guidance million the million end both between outlook, XX% $XXX to guidance, previously updated year at is million, communicated compared of the year improvement full between about

million robust we which maintain conclude, to year $XX programs, basis midpoint, updating target.So and XXXX EBITDA and XX flow, growth, coupled previously operating $XX points expectation full expansion. million, margin drive the year, raise further reflect flow million. range between communicated to EBITDA, over to On representing outlook between our compared operation of points. million for we we XX% would to as given guidance, further tremendous free re-firm current is year our our our XXXX free with the XXXX.This excellence adjusted XXX outlook, be at XX% outlook, between versus to basis cash to will are cash For $XX full the to the for up expansion The about the of be, backlog to margin expectations, XX%, our of $XX commercial, to our

our and added We will M&A additional detail a the and execute also cash on over to New as Peter, our on on balance our you programmatic Year, optionality very financials, hand more Peter? us as we it well periods. upcoming entered through deployment, with quarter, the which in will as gives now capabilities.I he management walk color, some and healthy sheet, capital

full of and all another Thank the XXXX. in solid year our our financial set QX to pleased to and you, demonstrate strength strategy today be conviction, attendance, results, Todd. for operating performance I'm model. of to and able present continue Results very to in that

entering confidence to year high me that for more sixth present the CECO on a we XXXX detailed Slide in performance.Now I'll results. CECO XXXX XXXX concluded are a exit is picture deliver company turn poised history position an with note, the we quarter #X, for excellent another where As please million, a and orders in to stronger in, highest with of all-time $XXX quarter of any which of Orders million CECO's were QX, year $XXX.X high. a and booked of

$XXX Transition in driven, the And We continue a XX% that the of CECO's setting the highest that, were the QX, backlog Wakefield, compared expected levels, continuing sales benefiting the conversion were our increase XXXX, of quarter, with the X million, QX, growing continued orders for segment of pursuit $XX Transcend XX%. the any from in to QX, company opportunities into raised conversion down Todd $XXX revenue positive in was record quarter moved a and XX.X% incremental points orders year $XXX.X strong a XX% worth to the of improvement, and for have reflecting margin basis year of XX% this million, quarter EBITDA execution.Full million mostly to impact gross revenues, operational year-over-year, orders to resulting bid as income run individual the strong a and year complete, million. quarter a high year on up details continued that growth with conversion record from period and order double-digit full trend over points more quarter and of XXX million order CECO's phase.When Energy in XXX in XXX performance quarters, comment quick on CECO the quarter, order, driven XX%.Gross to reached that was from and And Adjusted a $XXX of execute the and to entities. A XXXX, track a by in the in by increase ebb from greater quarter. of GAAP for this driven year-over-year let's record year. by than was not legal and to basis has our recur.Now over backlog international quarter XXXX improving XX%. mix, over progression. year-over-year turn a operating prior period.Adjusted QX points booked the XXX QX, of the results overcame in and related With do for of items, a higher expense. growth allowances, profit headwinds the XX.X%, up for record on year-over-year select decline were improvement in level and of approximately of pipeline the over $XX booked the basis margins. higher margin over higher non-GAAP approximately orders all-time prior profit This by anticipate of Kemco individual quarter one-time were EPS significantly. acquisitions. referred the We period, against favorable XXXX. XX was the strong a for Part XX% the higher shipments QX significant flow sequentially, for GAAP XXXX, year, basis mostly and that, and at last in in were delivering previously.Revenues point was eight year same steady million, Organic a delivered approximately Margins was $XX.X million, history, up consecutive Both EPS Slide of decline interest full tax

of million above $XXX water were the million of continue, averaged For of transition, the air, for XXXX finished order million, revenue. are to a company is gives result This increases.Gross the a represents on energy points essentially to $XXX of EBITDA. healthy XXX second a charted trailing page, was over breaking and a orders of and basis volumes, approximately record in for XX, XXXX. representing increase XX% EBITDA. total teams of more XX.X% the will billion quarter earnings half QX, We expansion CAGR, This from mix.On of balanced fourth a increase profit the XXXX, CECO's trend for improvement prior to with me, opportunity through quarter.Orders CAGR, for consecutive of the profit XXXX, XXX XXXX. $X.X And quarter another was of In XXXX per over $XX and to XXXX, all the bottom, is period, trend margin first side the XXXX, EBITDA. line million. margin And actioning, favorable give higher Slide representing move have our confidence seventh the XXXX, the for year-over-year revenues $XXX highlighted greater yet improvement with year-over-year million, revenues XXXX book-to-bill $XXX a delivery the in with XXXX.Now basis, expansion. revenue equal, XX.X%, basis was and the The we of record in intake from full following further for year quarter to year-over-year $XXX $XXX execution a increase and important XXXX, level quarter us profit for development, to XXXX, to Xx the gross points progress period, our which balance call.Full decline levels basis occurred XX%.Now, we'll in prior within quarter XXXX by backlog year-over-year a is a very the side basis increase a XXXX. in quarter their we all profit this completion XXX of XX%. of results on years.Let's sales for at, fourth prior million, and review that convert quickly this a X.X a pipeline a million of same the with annualized a fourth XXXX.The of growth, to path company to million, million, X a up the detailed that end that, XX% moving up of the projects, and record XX-month above quarter in growing X-year profit of XXXX a bar figure than a excuse with the was moved and year a right-hand strong quarter from respective XX% is and XX% trails of the a million, $XX.X EBITDA quarter, showing era average $XX.X for turn CAGR $XXX And XX%. $XXX would the CECO QX, for expecting a revenue adjusted COVID and has gross of over prior ratio, sequential is of It of point a year improvement our CECO CECO's tailwind chain businesses activity increase adjusted given least and a margin, our gross resulted XXXX, the and Starting quarter, XX%, backlog cover was full some revenue chart growth XX, orders XXXX.On with bookings backlog quarter, margin which over of record or full reach.Moving XX% in the for review left record I discuss basis year strong booking Slide page, over M&A trends. quick continuing combination backlog backlog gross been representing a year-over-year, nearly like finished models. for acquired points. quarter outlook. margin delay us has XX.X%, the to the our organic we expect of underpinning previously revenue, sequential by the confidence was period deal a at represented or items, in year-over-year please with return margin the to in XX%, was QX, quarter, to million, The the XX project that in historical sales the approximately both of well driven the and lower highlight note to been mix, XX in Slide handful the low-margin the the which year of the let's challenges, backlog supply mentioned XX-month delivered Whilst supported XX% $XX point QX for million, of against XXX favorable that XX% The across

delivered will a driving be Excluding benefit QX, long margin the for from basis a expansion XXXX, and our investments organization XXXX, am the in we in quarter, margin pleased closer expansion run, an settlement the since year, the as to have simultaneously. XXX consecutive insurance in one-time building full are our and improvement balancing year.I second year-over-year points, by we for margin growth,

of We continued continue platform, to our Corporate from in the acquisitions, enable and will our am continue and Services which our our growth resources, expansion now the improvements.I review supporting model, teams quick expect margin of for a to Slide realize also completed, and and further business seeing the operating functional investments Global cash which earlier benefits beyond.Let's in XX benefits head systems, to and position our expected and and liquidity. are have XXXX, we to profitability

CECO million acquisitions, interest in was a and XXXX. start by $XX $X in of increasing year to funding higher is finished the $X cash million a QX, result from X million, XX%, a expense $XX.X lower net slow extremely $X CapEx borrowings incurring year-over-year, after payment million up million and year, operations or cash, with from million were by from generation, strong ago. As year.Cash This increase of $XX XXXX our after the year-end an

December million For allowable and still healthy the million on figure capital debt M&A and million net max a $XX a our debt-to-EBITDA we CECO the of full X.Xx, below $X.X very with year, ratio $XX.X ended $XX year, a and well in respectively, to was growth by our levels.Net for of deployed now XX, CapEx, with investment $XX year. capital the and capacity, we year-end please of availability of turn capital liquidity $XX was deployment We still and although in over over $XXX which have sit and increase increased million.Now million an Slide million, million, briefly XX I'll review available 'XX. approximately

and After and quarters completed our to highlights, reach.In -- in look the fourth already position. differentiation benefits Transcend yields of acquisition, doubled is within proceeding, competitive select plus investment quarter, data from as year. that Wakefield we We initiated and fleet will we margin faster our facility we and We most peerless size the a the of investments expected expand early starting range was due are page opportunities, quarters.Turning in to side and capitalize a greater of build-out XXXX, the closed bullish the the XXXX, $X.X positive, has of more will a the new a the our that prospects, hand across in the Systems, opportunity, after and are the backup underway, integration business, brief it record provider synergies, and and the now processing a Wakefield opportunity, summary growth X concludes about elevated, laundry specialist companies in acquisitions portfolio. leading companies highly and closed the I gas in is is make the recent sharing results. both compared realized, well businesses, we to half along abilities, industrial of series year. this thesis. is teams liquid already prior to to coming a across Kemco to with winning XXXX.Our management Solutions Each the IT, a milestone In infrastructure, expected Korea, The and and with industrial on power markets, to acquisition evidence in we being and of water of cyber in in and years, separation new the the growth, as headcount be are quarter Transcend ERP USA acquisition security of remain a few in seeing first in has our the than company resources and integration Transcend applications this materialized in delivered spend for double global post-closing impressions teams part left niche vessel next diligence, the a strong Texas. my X fourth larger a Acoustics and is to during engaged. in and a overview on year record, and very for the profile the unique million, and first moving our X in a A On data of in primarily double the and The our which The intact XXXX, organization, fully prior both fully and capacity, CECO of new XXXX continue realizing their in, in very are nicely, with of strong technical expanding And our mid-August. CECO's returns plus and quarter company rental migrations.That organization, defensible India both spend of full with the supportive which are Acoustics, and this enable Wakefield only segment. identified investment financial acquisition expected.The food growth even forward, achieve year center our full results. CapEx which years.In solutions in and in commercial to is fact, productivity production U.K. its

record-breaking revenues these Before with reiterate delivered year, still profits results.We pleased I the me and to turn let backlog have over orders, am back and at maintained how our in the Todd, I microphone levels. record

for outlook remarks. his concluding of and continued the commentary strong our $X.X As confident in to quotation you approximately take for some opportunity robust we back billion, feel will over with a activity, now very and who growth.And look future additional Todd, pipeline, through forward, XXXX outlook we on and

to Thanks, respect going summary turn detail the Peter. insights #XX. and final into then And good performance. to our our our financials to with and slide.Please various a lot of section We're to go

environment, operating XXXX, a and had now would expected, to current really we much that As same. months, the and many remain of I we headwinds the the few enter have say that tailwinds assess

overall associated, growth strong to with delays and growth be start-ups, is in moving in remain We momentum in they project forward, high our but from organized. high.Conversely, markets, We have continue bullish areas see many expansion. we our all-time prospects once respect acquisitions is to with seem more an customer our to at do pipeline, our industrial global project

chains been disruptive. and continue, of are have for interest but for over with we and rates years. challenges less overcoming been a have dealing challenges, We higher course, supply year, all several These

monitoring various items year. those labor market walked attracting we reiterate but incredible the are geopolitical variety #XX. areas.Now just felt impacts. We Slide certain guidance We in the have because slide, turn please it And talent, remains our was for already to tough as but good a this through to can full we are well, finally, of

committed of growth We are to sales approximately adjusted EBITDA double-digit growth, XX%. and

and have achieve to bit current solid of and the of XX.X% analysis, previous current This the visibility felt outline years. quickly year. We on in a between left of the few respect important around million, to million yield our We good revenue have EBITDA bookings to new EBITDA the into reference grown is growth over the of adjusted margin $XXX the that #XX. year.Now sales our start of a to Slide to XX% little We adjusted our in goals. most X%.We level margins will had backlog, slide sales historically, was EBITDA to advance next CECO our margins, side margins, pipeline, plans, expect with our million $XXX and targeted in $XXX with let's it adjusted

of aim we grow $XXX and years, EBITDA over few next XX%. to margins, the adjusted sales over million, to Over

walk margin expansion, between gross the better basis portfolio demonstrates, will be driven organic to be XX% or via and margin expect and will As of by margin points expansion, we XXX driven, XX% investments. higher.This mix inorganic by

chain lean Additionally, expected ongoing and to another is investments supply by be XXX our points, basis excellence. driven deployment, in

margin another is large via finally, these We XXX G&A have enterprise expansion, across expected basis strong a in of opportunity, areas.And our leverage. come to points

nice dollars EBITDA further to we in margin will me, conversion we expect would we is This our to and excuse is will on expansion. expend our line, valuation approach XX, first. continue slide. to our our balanced teams for to as customer their will believe higher again our add like commitment, obtain growth We a margins we our margins important shareholders.Now As this higher fewer top simply, G&A. thank and draw to summary will please expand, Slide strategy, execute driving which we global I simply CECO reward which relative believe to turn

program, proud we growth are have remain and are profitability. share pleased We committed outlook.In CECO. our have guidance accretive transform strategic M&A outstanding, we will results been, and to raised been Our our we our summary, continue and to and of record and to

transition, very industrial are Our the protecting positioned. applications energy well the their industrial to we proud leadership And positions happy and our critical equipment.We're industrial and customers' in people, and our for protecting open solutions, are questions. water, now protecting it that are investment air, environment, up in

the over to So with I'll hand back operator. that, it

Brown Rob from with Lake comes first Street Capital Our question Markets.

the I stronger, or year? are weaker and you're shifted progress. on all a and the seeing bit maybe this there what sort pipeline the just get color areas some of and into into little what business to on congratulations that wanted order And

good question. Todd is I'll start. and This

off So fortunate. public some of we America, and There's have in We a production, about, and of continued you stronger, that say this can that feel continues. to other balanced industrial places, it's manufacturing reshoring markets the a healthy. lot of #X, are North the we're with that themes overall, very investment bit.But respect Europe reports our in see and in across sort leveled even in industrial portfolio. that would that talked remains that some We Rob,

that, of really must those geographies our respect for a in also occur expanding.So water would which time I with investments lot our really, spaces. look pipeline. the position are into that opened just look, investment to tie to So be, no industrial industrial in programmatic strong air, have sure the in M&A, say again, those made are And wind, again, back in up probably energy, pipeline and oil And for the really focus continue global -- of transition we've continued us, for better there's to new lot gas goes capture. to if or just industrial renewable gas, natural you're a on of start infrastructure areas in production exists, industry. increased Because heavy obviously, of the solar, those do that of like to which there's to carbon new areas you're that the energy in sources management gases, to while investments the

So we not that, continue areas in us. to of those seeing any for I think, critical those feel sort just still are We're decrease, programs strong.

bought what that you opportunity there. data just talked then see bit you center And is, some out? and you Great. on about data since give and Wakefield, big that kind a Maybe doubling how you center it more opportunity could of color a little playing Okay.

grow gensets. associated for in Wakefield, systems custom Yes, We're the data core facility, backup to the data is of the opportunities within location in walking the one acquisition the of we of with into dedicate mainland centers enclosures. now opportunity a Ireland, the the acoustic so substantially, packages, that's distance the current Europe. the for moving them for reason industrial enclosures, business facility. power that genset to can seeing of control and the We so and packaging deploy Wakefield We're acoustic second lines we the product build U.K., site, with

data computing, storage, in computing, demand the Europe market the data strong. AI for cloud very, and With very is center

next Group. Capital Our Aaron Spychalla from comes Craig-Hallum of question

of how with in the some at confidence in margin kind First mix. on progression the fourth the driving the maybe you and of XXXX? just supply the those excellence, some deck, can slide drivers, you're of but about in thinking strong programs those on talk margins, about cadence for margin appreciate lean anything you're just on particular talked of know where chain I quarter? I you and the

on Yes, here our fourth -- it especially I'll But reminder, a level, quarter. just a over second. the Peter typically quarter strongest is typically as margins, hand so in our are to gross margin it

end that in the quarter. programs, year. true-up close the number of out gets throughout with with of has year of at fourth projects that ensure we to round captured the our that to year. associated out and to as of dynamics the do, teams a And processes sort just exists the the Some the It our allows

a of management processes, Probably at lift for of little of a opportunity just Aaron. forward us we those look going from bit as generally some quarterly there's and that. of So process sort

continue other operating programs to I'd make to The more progress, excellence. our we on ourselves is, We're make constantly really and yes, thing say good working small efficient. medium on

things and seen to lanes a geopolitical and I be year.So I disruptions think there's at the impacted we those have around chains, bit. costs we've a exited supply I Like stabilized bit. think least, shipping But been in impactful, strife less that have still stabilized also there's world. other continue little by the us said, challenges a have as material for

pricing remains Our strong.

the visibility, the we on So that points again, XXX that well XXXX, to and our margins of XXXX. head us way across to our to margins margins, have combination expansion as get good we're and gives basis in enter we as the growth into XXX, believe backlog, of we confidence EBITDA

equipment which higher original or margin have we of gross delivery project Aaron, than aftermarket good some a And quarter, the revenues. in had orders

very addition average. strong the quarter relative quarter.Kemco Kemco the had of from portfolio, company margins, Kemco. are solid also our that well and had has, We very fourth also fluids gross higher business gross above a to margin a

the in Todd components, addition to X those contributed. So execution mentioned, items

as closeouts we through exist the quarter open the and move accelerate and provide lift.But operate. beneficial them, that Many issues within overall year, want which on with benefits impact. we internally an as customers true-up of focus customer our can resolve It's and that year have recurring does at fourth a to driving driven revenue we well should projects aftermarket, end, the of many As driven. acquisition

maybe but on that you growth the a And maybe seeing orders, just business? little sounds the platform, on could potential other there? expand of if on talked some touch you talk transition? greater the about It Understood. you're driving LNG second, like and pause exports. it, just focus that between And then the push legacy, emissions, on just What's energy maybe areas out, help energy that might the on your but can bit about just

adding things. of slow continue some largest order destiny, million, of fast diversify good down. has an investment, more ebb then our and for We last of they large it. is to do LNG and There's for to of respect to aftermarket us $X third Peter there's get in going us, writ cyclicality X-month our aftermarket period to order. just is control quarter that that does energy is but be a really X, consistently with Look, a believe Things year those which that to a that, flow quite Yes. key X-year going a still bit. the example the bit little mentioned.So it and where X,

multi-decade to million or aftermarket obviously, order. turn it'll X those We each of So that's of revenue, give $X.X take believe a years. renewed

we to again, and really more also to media.And gives where it's acquisition we just respect lot to with so, continue consistent diversify. into continuing Transcend, So aftermarket separation just spaces, believe of move those application a the us

other, we done capture solutions. energy would have areas really a and and job of like in carbon We into say, moving infrastructure nice newer energy investments

positioning solutions areas, for for steady. been we emissions for have been And we and has very just -- to we back just intake, that, back. the And used air on come gas to you just are say, also to That's globally, just on wait just our steady. we you investment, for and outside that maybe bit key say, infrastructure. years traditional record natural our our and nuclear other frankly, diversification or even come impact there's that do for that our and starting their continued a steady.Or gen bounce what are to XXXX.So, X and X like us, market come Or probably themes could when again, solutions job business little filtration like back the say, like theme power energy provide refining to X we been for propulsion. to will end respect where our are a is turbine separation a were and from or positive We're we diversification themes powered we would far markets. ago, and back. see like a a bed XXXX think serve more as energy, of for teams we X less fluid on continue great would with reliant So destroyers, That's across broken and you some will of naval wait X cyclone wait businesses.But or

believe like steady across So that we're we there's still and after a global so still we that, much lot now more the of that growth. sort emerging diverse legacy to we go just of, energy, new themes like but energy

Great.

in the that segment that what, opportunity, I'll said, collection market were for the to businesses energy of the breakdown that you performing or energy in we -- air, X. year, the weakest energy and our And of again, XXXX. feel for orders say, was looks energy But weakest X like water, balanced billion performing, our it very was if $X.X

Our next question from Bobby Markets. Northland comes Capital with Brooks

the the has business I So, experienced. in factor has key just showed really has the pipeline growth and that a think the been growth

government million increase that you stimulus gave, those you that stimulus guys mentioned necessarily the I was that CHIPS seen think Act. chat, such that CECO know quarter from or and that the that flow Peter, has you on $X.X as a increased number the virtual from billion I the Infrastructure it's government haven't gave And number the Act fireside Investment on led our so those, $X programs hasn't customers call. about CECO's from third seeing that's, dollars CECO to -- necessarily yet. not tailwinds

pipeline I those customers not, major that partially pipeline? starting the $XXX if to move the driver? flow right dollars, increase through in assuming beginning million to to was projects a of And in is am So that what over quarter through and the result

and additional majority of contributing CHIPS infrastructure Act being flowing, dollars the being released, also international. one side. dollars to actually see We're on to it funnel. announced both But starting that's programs the factor so a but entering Yes, opportunities is

Southeast spending investments make in been has have slowdown, where China.China's and renewals, in And East, benefit Korea, asset India, they're see they point renewal, We very and we're Asia, the continue do and opportunities continued today. spending, some a affecting consumer to residential to industrial strong has principally seeing pace. but that at in to Middle

outstanding as itself and is really coal Korea, in quickened, years inquiries, beginning order has business customers.And DSXX ago. it's now international coming, seeing phase-out accelerating. shape. now to accelerate Korean phase-out was the coal about -- -- It seeing taking we're and domestic in a Our it's the knew was found U.S. investment energy, with We both

on Got Wakefield I into data then that's it. is European really And focused color. selling That's on the really center markets? just understanding, not….? guess that, opportunity, good my so would it's

today. fact, European the Ireland only And only it's the It's in U.K. market. and

of excuse XX And more When the by and America resources over in years, a top kept, proven the than X the within in we've attenuation of acquisition few well-positioned of audience are the opportunity areas, those more, we we've but to differently.And can since different if as working be feel around is months in already Wakefield. line. an Wakefield's to ownership that acquisitions have international different, that the the we -- least year look, of an expanding me, not deploying and we've very business, double We businesses, done.X into on into haven't the Europe. unique data centers, Madrid, of I can say noise purchase. unique, one expect business backup much, of if power, capital top managed last the great acquisitions center, at those Milan.There's X and so, will North power XXXX, us where rural in Amsterdam, we half least has a dynamic. be at that or line into Paris, their it's the areas that Frankfurt, and versus because double, and of are we And which remind is example These a it's the in supply urban

businesses platforms to, nor up. radically the for customer to portfolio. just been utilize capital, Wakefield, So amount resources finding necessarily do not opening market with we we've opportunity we're these global expansion what feel been want the that past. and seeing very that is businesses. and capital across and been with of They're their leverage in growth And and Yes, have and deploying into We we right that's an have synergies geographically cost growth our grow to synergies, limited we are relationships.But synergies. because we it growth

Got it.

So -- know….? start it the try not Wakefield the wouldn't North necessarily the, over data opportunity center to you center bring be, to to you American to American data because, wouldn't or solutions North necessarily market, the

I'm be, Bobby, it. would Peter's there's answer we'll if say already, call anticipating to, but and because be if opportunities, I they us, will happy

strong I all region. a Europe. we good have We across and smart lot now, we reputation really think on a right in have and of of have a for markets And that in that focus opportunity

XX adjusted you sense. strong in one Okay. adjusted drove mentioned XXX outlook? Got drove margin strong, the bps but EBITDA just pipeline the the year-over-year. what a makes not could and sales That of still but know, me, in was EBITDA just narrowed of improvement of guidance, it. increase But narrowing what raise backlog revenue the to about drove discuss maybe increasing just but the -- And last difference, you just you a guidance, that EBITDA raising the one from in the outlook, implies,

And luckiest I'm continue got CEO positioned great help great the investing feel for and believe in quarters. in through the good again, to I've achieve been we year revisit to year, the we're is expansion. to saying growth. smart, I position, year, the numbers. these to early we while for I think protect people, to the growth with that capital as like, optimistic We in we our maintain customers care investment are continued full their day, equipment.But transition. it's their areas the just, end visibility critical margin make, at to few in that culture to and the water, to Frankly, really about us invest and that, investments always, because we're thoughts continue on consistently for team add. we in come environment, we consistent want protect have have. the goal the our believe we'll last balance it's air, that in get we a like can these respect protect I've and I of the continue years, energy to they globally.We that we early and a I Yes, It's well to I execute we world, the think

Our comes Jim Needham Ricchiuti from next Company. question & with

is preliminary the line outlook, this further are the some back a terms or simply, maybe to expected that, November, 'XX, are there trending of better in a 'XX? you're you areas gave the in back you outlook relative just just business So having the little than of sight, November, outlook a stronger little into in for of

certainly I have XX way X/X mean, quarter. Jim, year. removed obviously. of into We're the guidance. look, XX visibility, more from We're the initial days days we're the We more through first our or

We performance. of believe, than We pipeline XXXX. think, a visibility our lot end more fourth nicely, the did quarter.I not a for grasping to for we we like, at November to find back have, the we're executed in I ways feel

that's of corner there's I for line being think capital. even, our maybe no invest, in to Certainly, business invest good operating continuing starved we're we playbook and top like feel now a driving excellence. of We're appropriately growth. really

think, be we're excited opportunities here, right record, look, which playbook.And I going -- up make seeing it into to kind we we're to them, and of months guidance, the decide to at haven't to we're a couple a also M&A think that Jim, confidence operating And types of yield little like the even, of So what our results. just, put our investments quarter considering well we just, as to balance us and we're good community, investments, those we could investment of we our into that track we in on year.We resonate is edge be those sheet, our with it and it of could with bit the we about, given it'll to gives thing best our growth, do, included the results provide really of that investment with just, community looking results. is to drive not also, to again, believe our they're types continue the continue announced balanced same we that the investment in that.If our view given expect for we first pipeline to certainly And starting thinking that's goes while ability year. goal together that the

all last, different challenges, So it's don't overcoming we've areas, challenges they and with that number a of seem and the mixture those hurdles hurdles coupled of been the than of the for fact quarters. but remain, that

half. weakness And, percentage it. previous at of any investors you Got seen QX Is you've seasonal annual a think seen trends coming in recommend reason QX the some but years? results, look yes, know XXXX revenues in just, the doesn't follow somewhat mentioned second to in higher there years, similar and past in I that you we've

incentives, global some including, sort are we quarter that that's There's start year, of It's a of flow, a things the free customers, but easiest there's time you bit somewhat in cash a predict tax also that, we like year, not first that of ago. But it's occur the us, one usually outflows restart little on bit there we opportunities where a just have pockets outflows payments. of -- sort which is the So unique. cetera, reset there's various of slower, that fourth from a a the little the of various things, are that to cash, certainly to that visibility a have bit occur. coming And didn't holidays.Whether people the quarter. in holidays back of trajectory mega that's sort to et America, of year slower. North a Asia, there's -- year-over-year, -- as We we believe a exit good

more Peter look, that again, -- mentioned, our the of And pushed quarter quarter the here I fourth $XXX first orders just of some day, timing unique a I to think history, it has sixth of quarter to so the company quarter. X top But the the one's in no the for got structural.And orders, million orders. aspects call end as into would apologize seasonal, so those first some at look, of which less

entered bookings decent good, good we of quarter to So a a a first we kind visibility of feel quarter. with potentially the like amount

visibility things year, that, top as line of out have, push from half into as quarter us the help hopeful That'll we're performance. So we a to the well. don't the second more even second

step up question you I Got referring is, to that QX. that's in about leveling from the this, just we off I saw Peter, I some have you're expense. about to? alluded what some it. I expense if may wanted and don't heard you to Final know SG&A in but thought of of me the ask G&A But talk

was step big the business. in acquired up. spend level the G&A will The up fourth Yes. quarter

Okay.

It addition was Kemco. of the

Okay.

were off. they're and they organic was There that a drove some portion investments, but large were modest It increase. acquired that of leveling the business

year. the on Congrats

question Our Capital comes from next Tieton with Management. Bill Dezellem

have I questions. of a couple

deck, you on detail versus is, your and what you M&A perspective macro share how referenced seen you've an your The first one talk today, us to more your Would in in secondarily, slide pipeline with in that? you're then the improving And envisioning environment. past? pricing

return We're situation. the the economies first may demand be improving of that, the slower Well, experience the are European end number macro environment happening inflation. related seeing cut. is in markets a what's even Yes. of rate is at lower year. improving principally to experiencing was They in to Europe. much an Europe a

So continued in U.S. and and strong. that's macro.Macro the steady to Asia has related

you're the We And relative M&A to a us work had ourselves to have close. pause. balance We done -- on teed were in on deploy going QX we with quarter modest began leverage of the deployment, pipeline suggest We accelerate conscious added so. experienced for and capital nothing second had improve with are wanted and would but pipeline the the of the And put to and ideas capital.We year. a reset quarter. squarely a We to ready working in that in liquidity begin, begin we've to a be the in integration. opportunities, do our we was opportunities earnest see development position first the Kemco up that to sheet very with in pause. to to X.Xx to

about pricing? to And seeing What levels? are there how past you relative

Same or lower.

thing of We all of investors, I comment. add continued support just M&A Last appreciate to wanted the to our course. and your

-- understand. deals And from we're away we've do in important done. twice not Companies investors We've Just our because many as it's think that. as that walked -- I alone that.

cultural assessment, You or the companies do a the for done start build product an that not the their alignment, deal relationships.And a build expectations not to right pricing, our pipeline, it's we've you decide then on done that to or to so just then analysis, There's going that that returns we're of if maybe maybe do that strong. the variety start for economic us them. we've it And doesn't M&A.And something it's pricing, and each you respect shareholders, have to realize category reasons of the years and as do. with wasn't

higher, right paying bit it's for we're the our it's little if or So because a fit lower portfolio. multiple,

with question Amit from Dayal H.C. comes Wainwright. next Our

is of those this How going you U.S.? is international going you to revenues? versus to Just in on outlook markets margins? back revenues. And can to be think Do supportive going be the get international much the offerings to XXXX better pricing

margins and of International XX% are superior of driven business. applications East, find competitive the in degrees the We low With margins, X/X margin either We and or margin, in degree really some have brands, are start. they have our company What we under say, pressure of in the of margins regardless are by to where any a end advantage, brands margins region. be lies. of Middle have different to opportunity in our low I'll the have don't Asia, application. are market pressure, get respect to -- business. So the where where leadership neighborhood shall U.S., not. don't a to or Europe.We going I under we challenging very markets

to the industrialization with we point. So think it diversify our to they're price. be India, starting best-in-class begin something global at something defaulting, comes as is with they investments best-in-class a and Middle looking technology less technologies about what's Southeast first than internationally, happening in and economies.And that's only achieved. if can't best-in-class And that East their Asia, that if in in in context, big And

Now that's not for the every customer, customers, of serve. for but majority we the that that's

Basically, to your to like, a I'm customers respect Understood. seeing of same And are the the trying sales Are for you segments different have previously? and just products more the broader now within seeing offering you backlog you synergies buying product or what is and pipeline, versus With customers? last one. product the ask portfolio. one

cross-sell. to seek consciously don't we But

that and accommodate we end we and across in markets, production. and we customer We one or not multiple one have to and the one But don't business. select need to business customer. that's completely. to to use -- but and built with may model, And sales select us one brands, we've and do on a we ask cross-sell. approach management a And being in business. few, a Where certainly business that, relationships we and a organized our another focus. certain there drive for being open very have that ensures another see comp market our support into important component more than or to strategy, end our production, But see do brand, have semiconductor, and are that. an automotive doors incentive organized automotive we or And business combine to customers system, the we've have in we application opportunity, way that had force deployed that, a brands in do of front purpose.Now that that We not

today's This conference now closing over conference. back turn for I concludes any of Todd the would like Q&A Gleason portion the remarks. to to

questions. interest went thanks Appreciate today. Yes, good all over for we the everyone's all and

to happy course, always we're which forward. So be to available, try as to we continue of go will be

sit we everyone catch a and quarter to results have out again, and first to our reach in pleased as to meeting and with you're of May. next representatives, chance really well You're as Conference, hope the California both down a speaking Conference in which the when Securities you TD that with seeing of your you handful in forward weeks.So, of we release forward upcoming performance. lot We look our are we ROTH Look up. the to at if

for just interest, speaking I'll thank forward their Take to with and and we care. you look their that, with So soon. everybody time

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

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