Key Highlights

  • Net sales were USD 404.4 million, up 104.7% from the prior year quarter.
  • Organic growth contributed 41% to third quarter net sales growth.
  • Non-GAAP Operating Income was USD 55.7 million, with a Margin of 13.8%.
  • Gross profit was USD 130.1 million, or 32.2% of sales.

CECO Environmental Corp. (NASDAQ:CECO) reported third quarter 2026 net sales of USD 404.4 million, an increase of USD 206.8 million, or 104.7%, from USD 197.6 million a year earlier. Organic growth was 41%, and approximately 63% of third quarter net sales is attributable to organic revenue, which the company defines as Revenue from businesses owned for more than twelve months. Reported EPS was USD 0.60, compared with estimates of EPS of USD 0.59 and revenue of USD 399.64 million.

The company reported a net loss attributable to the company of USD 2.0 million, compared with Net Income of USD 1.5 million a year earlier. Operating income was USD 10.5 million, up USD 1.1 million from USD 9.4 million, and the GAAP Operating Margin was 2.6% compared with 4.8%.

Gross Profit and Operating Costs

Gross profit increased USD 65.5 million, or 101.4%, to USD 130.1 million. Gross Profit as a percentage of sales was 32.2% compared with 32.7% a year earlier. The company said gross profit was reduced by USD 16.7 million of additional cost of sales related to the Fair Value adjustment to inventory acquired in the Thermon acquisition. Adjusted Gross Profit Margin was 36.3%, and gross profit margin excluding Thermon was 34.5%, which the company tied to margin expansion for products in power generation.

Selling and administrative expense was USD 91.2 million compared with USD 47.0 million, or 22.6% of sales compared with 23.8%. The company attributed the increase primarily to expenses associated with the Thermon acquisition, partly offset by lower expenses in the Industrial Process Solutions segment following the divestiture of the Global Pump Solutions Business on March 31, 2025. Amortization expense was USD 15.3 million compared with USD 6.1 million, and Acquisition and integration expense was USD 12.4 million compared with USD 0.3 million. Interest expense was USD 11.0 million compared with USD 5.1 million.

Non-GAAP Reconciliation

The company adjusts GAAP operating income to exclude amortization of intangible assets, acquisition and integration expenses, the gain on the sale of the Global Pump Solutions business and other expenses. Other expenses include restructuring, asbestos litigation expenses, executive transition expenses, purchase accounting inventory adjustments and consulting fees tied to ERP system implementations. Third quarter other expense of USD 17.5 million included USD 16.7 million related to the inventory fair value adjustment.

On that basis, non-GAAP operating income was USD 55.7 million with a margin of 13.8%, compared with USD 17.5 million and 8.9% a year earlier.

Nine Month Results

For the nine months ended September 30, 2026, net sales increased USD 335.6 million, or 60.0%, to USD 895.3 million, including organic growth of 42%. Gross profit increased USD 86.6 million, or 44.7%, to USD 280.5 million, and gross margin was 31.3% compared with 34.6%. The company tied the decline primarily to USD 26.2 million of additional cost of sales for the Thermon inventory fair value adjustment. Adjusted gross profit margin was 34.3%.

Selling and administrative expense was USD 201.2 million compared with USD 149.4 million. Acquisition and integration expense was USD 68.2 million compared with USD 8.4 million. The operating loss was USD 20.8 million compared with operating income of USD 89.3 million, which the company tied primarily to the gain on the sale of the Global Pump Solutions business recognized in the first quarter of 2025. The net loss was USD 36.6 million compared with net income of USD 48.4 million. Non-GAAP operating income was USD 105.6 million with a margin of 11.8%, compared with USD 44.5 million and 8.0%.

Thermon Integration and Organic Growth

CECO's net sales of USD 404.4 million include 41% organic growth, with organic revenue at approximately 63% of net sales. The filing identifies Thermon inventory fair value adjustments of USD 16.7 million in the quarter and USD 26.2 million over nine months, a 34.5% gross margin excluding Thermon, acquisition and integration expense of USD 12.4 million and amortization expense of USD 15.3 million.