Earnings call: CECO Environmental reports robust Q1 with record backlog

CECO Environmental Corp. announced a strong start to 2024 with a solid first-quarter performance, including a near-record backlog of $390 million and record sales and adjusted EBITDA for a first quarter. Please go ahead. Steven Hooser: Thank you, Howard, and thank you all for joining us for the CECO Environmental first quarter 2024 earnings call. Importantly, the quarter was highlighted by record gross margins for any quarter, which we believe demonstrates our strategic progress to drive operational excellence programs and steadily advancing and further diversifying our overall portfolio. Sales for the quarter of $126 million were a 12% increase over the same period in 2023 and a quarter one sales record for the company. The record levels of backlog are persisting even after CECO delivered a record sales quarter in Q4 and in Q1, highlighting the strength of our opportunity to orders conversion. Short cycle mix versus prior quarter was a driver, accounting for about 25 basis points of the improvement, favorable backlog margins from the acquired entities contributed approximately 25 basis points, and the benefit of a factory closure in China completed in December of last year added another 50 basis points in the quarter. Moving to adjusted EBITDA, Q1 2024 delivered $13.2 million, a record for any quarter one benefiting from record sales in the first quarter with margins expanding appropriately about 200 basis points to 10.5%. EBITDA drop through in higher sales was partially offset by seasonally higher G&A expenses, which included our inaugural global leadership meeting held in Dallas, an investment in a commercial excellence project with a leading consulting firm, and the launch of our global sourcing and productivity initiatives.