10-Q

CECO ENVIRONMENTAL CORP.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


(in thousands, except per share data)	September 30, 2026			December 31, 2025
ASSETS
Current assets:
Cash and cash equivalents	$	72,066		$	33,144
Restricted cash		1,630			83
Accounts receivable, net of allowances of $7,323 and $9,866		415,494			172,909
Costs and estimated earnings in excess of billings on uncompleted contracts		144,735			115,614
Inventories		182,887			53,996
Prepaid expenses and other current assets		103,104			29,450
Income tax receivable		38,280			4,986
Total current assets		958,196			410,182
Property, plant and equipment, net		172,852			47,808
Right-of-use assets from operating leases		40,815			28,251
Goodwill		1,506,007			288,163
Intangible assets – finite life, net		985,553			96,966
Intangible assets – indefinite life		9,647			9,705
Deferred income taxes		1,008			449
Deferred charges and other assets		27,078			12,245
Total assets	$	3,701,156		$	893,769
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of debt	$	15,999		$	1,879
Accounts payable		205,858			117,848
Accrued expenses		130,529			57,639
Billings in excess of costs and estimated earnings on uncompleted contracts		388,132			123,726
Income taxes payable		—			4,738
Total current liabilities		740,518			305,830
Other liabilities		19,171			3,317
Debt, less current portion		583,321			210,559
Deferred income tax liability, net		236,389			27,920
Operating lease liabilities		32,981			22,961
Total liabilities		1,612,380			570,587
Commitments and contingencies (See Note 13)
Shareholders’ equity:
Preferred stock, $0.01 par value; 10,000 shares authorized, none issued		—			—
Common stock, $0.01 par value; 100,000,000 shares authorized, 58,613,676 and 35,644,537 shares issued and outstanding at September 30, 2026 and December 31, 2025, respectively		585			355
Capital in excess of par value		2,071,507			269,453
Retained earnings		19,437			56,621
Accumulated other comprehensive loss		(7,537	)		(8,901	)
Total CECO shareholders' equity		2,083,992			317,528
Noncontrolling interest		4,784			5,654
Total shareholders' equity		2,088,776			323,182
Total liabilities and shareholders' equity	$	3,701,156		$	893,769

The notes to the condensed consolidated financial statements are an integral part of the above statements.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	Three months ended September 30,					Nine months ended September 30,
(in thousands, except share and per share data)	2026			2025		2026			2025
Net sales	$	404,428		$	197,599	$	895,308		$	559,687
Cost of sales		274,328			133,020		614,820			365,838
Gross profit		130,100			64,579		280,488			193,849
Selling and administrative expense		91,241			47,034		201,223			149,393
Amortization expense		15,316			6,144		27,108			12,177
Acquisition and integration expense		12,430			252		68,172			8,427
Loss (gain) on sale of Global Pump Solutions business		—			801		—			(63,701	)
Other operating expense (income), net		597			948		4,771			(1,778	)
Income (loss) from operations		10,516			9,400		(20,786	)		89,331
Other loss, net		2,391			2,056		6,082			1,196
Interest expense		11,060			5,054		24,392			16,169
(Loss) income before income taxes		(2,935	)		2,290		(51,260	)		71,966
Income tax (benefit) expense		(1,023	)		483		(14,612	)		23,610
Net (loss) income		(1,912	)		1,807		(36,648	)		48,356
Noncontrolling interest		106			308		536			1,363
Net (loss) income attributable to CECO Environmental Corp.	$	(2,018	)	$	1,499	$	(37,184	)	$	46,993
(Loss) earnings per share:
Basic	$	(0.03	)	$	0.04	$	(0.81	)	$	1.33
Diluted	$	(0.03	)	$	0.04	$	(0.81	)	$	1.29
Weighted average number of common shares outstanding:
Basic		58,553,982			35,359,969		45,935,515			35,225,740
Diluted		58,553,982			36,396,693		45,935,515			36,549,130

The notes to the condensed consolidated financial statements are an integral part of the above statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(unaudited)


	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2026			2025		2026			2025
Net (loss) income	$	(1,912	)	$	1,807	$	(36,648	)	$	48,356
Other comprehensive (loss) income, net of tax:
Foreign currency translation gain		8,136			2,020		1,364			3,943
Comprehensive income (loss)	$	6,224		$	3,827	$	(35,284	)	$	52,299

The notes to the condensed consolidated financial statements are an integral part of the above statements.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(unaudited)


	Common Stock				Capital in excess of			Retained			Accumulated Other Comprehensive			Non-controlling			Total Shareholders'
(in thousands, except share data)	Shares		Amount		par value			Earnings			Loss			interest			Equity
Balance December 31, 2025		35,645	$	355	$	269,453		$	56,621		$	(8,901	)	$	5,654		$	323,182
Net (loss) income		—		—		—			(398	)		—			150			(248	)
Restricted stock units issued		175		—		(5,818	)		—			—			—			(5,818	)
Share based compensation earned		21		2		960			—			—			—			962
Translation loss		—		—		—			—			(75	)		—			(75	)
Noncontrolling interest distributions		—		—		—			—			—			(803	)		(803	)
Balance March 31, 2026		35,841	$	357	$	264,595		$	56,223		$	(8,976	)	$	5,001		$	317,200
Net (loss) income		—		—		—			(34,768	)		—			279			(34,489	)
Restricted stock units issued		73		—		(27	)					—			—			(27	)
Issuance of common stock in connection with business combinations		22,531		227		1,792,365			—			—			—			1,792,592
Share based compensation earned		—		—		12,559			—			—			—			12,559
Translation loss		—		—		—			—			(6,697	)		—			(6,697	)
Balance June 30, 2026		58,445		584		2,069,492			21,455			(15,673	)		5,280			2,081,138
Net (loss) income		—		—		—			(2,018	)		—			106			(1,912	)
Restricted stock units issued		6		—		(6,698	)		—			—			—			(6,698	)
Issuance of common stock in connection with business combinations		88		1		—			—			—			—			1
Share based compensation earned		75		—		8,713			—			—			—			8,713
Translation gain		—		—		—			—			8,136			—			8,136
Noncontrolling interest distributions		—		—		—			—			—			(602	)		(602	)
Balance September 30, 2026		58,614		585		2,071,507			19,437			(7,537	)		4,784			2,088,776


	Common Stock				Capital in excess of			Retained		Accumulated Other Comprehensive			Non-controlling			Total Shareholders'
(in thousands, except share data)	Shares		Amount		par value			Earnings		Loss			interest			Equity
Balance December 31, 2024		34,978	$	349	$	255,211		$	6,570	$	(14,441	)	$	4,204		$	251,893
Net income		—		—		—			35,984		—			458			36,442
Restricted stock units issued		260		3		(3,045	)		—		—			—			(3,042	)
Share based compensation earned		12		—		3,641			—		—			—			3,641
Translation gain		-		—		—			—		1,519			—			1,519
Noncontrolling interest distributions		-		—		—			—		—			(402	)		(402	)
Balance March 31, 2025		35,250	$	352	$	255,807		$	42,554	$	(12,922	)	$	4,260		$	290,051
Net income		—		—		—			9,510		—			595			10,105
Exercise of stock options		1		—		5			—		—			—			5
Restricted stock units issued		57		—		(224	)		—		—			—			(224	)
Share based compensation earned		—		—		2,878			—		—			—			2,878
Translation gain		—		—		—			—		404			—			404
Balance June 30, 2025		35,308	$	352	$	258,466		$	52,064	$	(12,518	)	$	4,855		$	303,219
Net income		—		—		—			1,499		—			308			1,807
Exercise of stock options		300		3		3,814			—		—			—			3,817
Restricted stock units issued		13		—		(253	)		—		—			—			(253	)
Share based compensation earned		20		—		3,759			—		—			—			3,759
Translation gain		—		—		—			—		2,020			—			2,020
Noncontrolling interest distributions		—		—		—			—		—			(802	)		(802	)
Balance September 30, 2025		35,641	$	355	$	265,786		$	53,563	$	(10,498	)	$	4,361		$	313,567

The notes to the condensed consolidated financial statements are an integral part of the above statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Nine months ended September 30,
(in thousands)	2026			2025
Cash flows from operating activities:
Net (loss) income	$	(36,648	)	$	48,356
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		41,509			18,726
Unrealized foreign currency loss (gain)		1,755			(2,219	)
Intangible asset impairment		1,927			—
Inventory fair value adjustment		26,237			—
Gain on sale of Global Pump Solutions business		—			(63,701	)
Fair value adjustment to earnout liabilities		—			(7,403	)
Loss on sale of property and equipment		78			46
Debt discount amortization		1,006			631
Share-based compensation expense		19,245			9,507
(Benefit) provision for credit loss		(3,023	)		209
Inventory obsolescence expense		1,333			(132	)
Deferred income tax benefit		1,856			6,322
Changes in operating assets and liabilities, net of acquisitions and divestiture:
Accounts receivable		(134,362	)		5,822
Costs and estimated earnings in excess of billings on uncompleted contracts		(829	)		(38,605	)
Inventories		2,899			(6,477	)
Prepaid expense and other current assets		(96,027	)		(15,302	)
Deferred charges and other assets		(4,079	)		(5,597	)
Accounts payable		50,183			15,834
Accrued expenses		(7,340	)		15,970
Billings in excess of costs and estimated earnings on uncompleted contracts		256,488			21,193
Income taxes payable		(6,970	)		(4,142	)
Other liabilities		6,159			(3,139	)
Net cash provided by (used in) operating activities		121,397			(4,100	)
Cash flows from investing activities:
Acquisitions of property and equipment		(12,863	)		(8,673	)
Net cash proceeds for sale of Global Pump Solutions business		—			107,808
Cash paid for acquisitions, net of cash acquired		(437,971	)		(97,615	)
Net cash (used in) provided by investing activities		(450,834	)		1,520
Cash flows from financing activities:
Borrowings on revolving credit lines		384,700			185,800
Repayments on revolving credit lines		(221,800	)		(183,700	)
Borrowings on long-term debt		235,000			—
Repayments on long-term debt		(4,335	)		(1,230	)
Payments on finance leases and financing liability		—			(643	)
Deferred financing fees paid		(7,664	)		—
Deferred consideration paid for acquisitions		—			(2,787	)
Equity awards surrendered by employees for tax liability, net of proceeds from employee stock purchase plan and exercise of stock options		(11,862	)		930
Noncontrolling interest distributions		(1,405	)		(1,204	)
Net cash provided by (used in) financing activities		372,634			(2,834	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(2,728	)		86
Net increase in cash, cash equivalents and restricted cash		40,469			(5,328	)
Cash, cash equivalents and restricted cash at beginning of period		33,227			38,201
Cash, cash equivalents and restricted cash at end of period	$	73,696		$	32,873
Cash paid during the period for:
Interest	$	23,393		$	15,861
Income taxes	$	20,898		$	22,424

The notes to the condensed consolidated financial statements are an integral part of the above statements.

CECO ENVIRONMENTAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Reporting for Consolidated Financial Statements

The accompanying unaudited condensed consolidated financial statements of CECO Environmental Corp. and its subsidiaries (the “Company,” “CECO,” “we,” “us,” or “our”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements of the Company contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position as of September 30, 2026 and the results of operations, cash flows and shareholders’ equity for the three and nine months ended September 30, 2026 and 2025. The results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results to be expected for the full year. The balance sheet as of December 31, 2025 has been derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on March 2, 2026 (the “Form 10-K”). Certain prior period amounts were reclassified to conform to the presentation in the current period.

During the nine months ended September 30, 2026, the Company completed the acquisition of Thermon Group Holdings ("Thermon"), as discussed in Note 14. As a result, Thermon's assets, liabilities, and results of operations have been included in the Company's condensed consolidated financial statements commencing on the acquisition date.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

These financial statements and accompanying notes should be read in conjunction with the audited financial statements and the notes thereto included in the Form 10-K.

Unless otherwise indicated, all balances within tables are in thousands, except per share amounts.

2. Recent Financial Accounting Pronouncements

The Company considered the impact of all Accounting Standards Updates ("ASUs") issued by the Financial Accounting Standards Board ("FASB"). The ASUs issued but not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company's consolidated financial statements.

Accounting Standards Adopted in Fiscal 2026

Effective January 1, 2026, the Company adopted ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which introduces a practical expedient for estimating credit losses on current accounts receivable and contract assets. Adoption did not have a material impact on the Company's condensed consolidated financial statements.

Accounting Standards to be Adopted

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which removes references to project stages, and requires capitalization of software costs to begin when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the intended function. The ASU is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which addresses expense disclosure requirements, primarily the disaggregation of expense captions. The ASU is effective for fiscal years beginning after

December 15, 2026, and interim periods beginning after December 15, 2027. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s consolidated financial statements.

3. Accounts Receivable

Accounts receivable as of September 30, 2026 and December 31, 2025 consisted of the following:


(in thousands)	September 30, 2026			December 31, 2025
Accounts receivable	$	422,817		$	182,775
Allowance for credit losses		(7,323	)		(9,866	)
Total accounts receivable, net	$	415,494		$	172,909

Accounts receivable, net as of the beginning of the prior year period, or January 1, 2025, were $159.5 million.

Balances billed but not paid by customers under retainage provisions in contracts within the Condensed Consolidated Balance Sheets amounted to approximately $12.1 million and $10.9 million at September 30, 2026 and December 31, 2025, respectively. Retainage receivables on contracts in progress are generally collected up to 24 months following contract completion, and are recorded in either "Accounts receivable, net" or "Deferred charges and other assets" within the Condensed Consolidated Balance Sheets depending on timing of expected collection.

Allowance for credit losses activity for the nine months ended September 30, 2026 and 2025 consisted of the following:


	Nine months ended September 30,
(in thousands)	2026			2025
Balance at beginning of period	$	9,866		$	8,863
Recoveries (write-offs), net		480			(1,353	)
(Benefit) provision for credit loss		(3,023	)		986
Balance at end of period	$	7,323		$	8,496

4. Contract Assets and Liabilities

Contract assets and liabilities as of September 30, 2026 and December 31, 2025 consisted of the following:


(in thousands)	September 30, 2026		December 31, 2025
Costs and estimated earnings in excess of billings on uncompleted contracts	$	144,735	$	115,614
Billings in excess of costs and estimated earnings on uncompleted contracts		388,132		123,726

As of the beginning of the prior year period, or January 1, 2025, costs and estimated earnings in excess of billings on uncompleted contracts and billings in excess of costs and estimated earnings on uncompleted contracts were $69.9 million and $81.5 million, respectively. The contract liabilities recorded in “Accrued expenses” on the Condensed Consolidated Balance Sheets were $34.7 million, $15.3 million and $9.7 million as of September 30, 2026, December 31, 2025 and January 1, 2025, respectively. Approximately 70% of the Company's contract liabilities as of December 31, 2025 were recognized as revenue in the nine months ended September 30, 2026.

5. Inventories

Inventories as of September 30, 2026 and December 31, 2025 consisted of the following:


(in thousands)	September 30, 2026		December 31, 2025
Raw materials	$	99,764	$	15,398
Work in process		33,620		18,026
Finished goods		49,503		20,572
Total inventories	$	182,887	$	53,996

Adjustments to the allowance for obsolete inventory, as recorded to cost of sales, amounted to a decrease of $0.2 million and a decrease of $0.3 million for the three months ended September 30, 2026 and 2025, respectively, and an increase of $1.3 million and a decrease of $0.1 million for the nine months ended September 30, 2026 and 2025, respectively.

6. Goodwill and Intangible Assets

Goodwill and indefinite life intangible asset activity for the nine months ended September 30, 2026 and the year ended December 31, 2025 was as follows:


(in thousands)	Nine months ended September 30, 2026					Year ended December 31, 2025
Goodwill / Tradename	Goodwill		Tradename			Goodwill			Tradename
Balance at beginning of period	$	288,163	$	9,705		$	269,747		$	9,466
Acquisitions		1,217,482		—			41,769			—
Divestiture		—		—			(26,838	)		—
Foreign currency translation		362		(58	)		3,485			238
Balance at end of period	$	1,506,007	$	9,647		$	288,163		$	9,705

During the nine months ended September 30, 2026, the Company, as discussed in Note 14, completed the acquisition of Thermon Group Holdings ("Thermon") and, through its Pinnacle Processes Inc. ("PPI") (formerly known as Effox-Flextor-Mader, Inc.) joint venture, completed the acquisition of Flexible Specialty Products ("FSP").

Finite life intangible assets as of September 30, 2026 and December 31, 2025 consisted of the following:


	September 30, 2026				December 31, 2025
(in thousands)	Cost		Accumulated Amortization		Cost		Accumulated Amortization
Technology	$	217,564	$	21,277	$	22,314	$	15,155
Customer relationships		713,633		74,317		140,337		62,163
Tradenames and other		163,256		13,477		17,660		6,084
Foreign currency adjustments		2,756		2,585		87		31
Total intangible assets – finite life	$	1,097,209	$	111,656	$	180,399	$	83,433

Finite life intangible asset activity for the nine months ended September 30, 2026 and 2025 was as follows:


	Nine months ended September 30,
(in thousands)	2026			2025
Intangible assets – finite life, net at beginning of period	$	96,966		$	74,050
Amortization expense		(27,108	)		(12,177	)
Acquisitions		917,300			41,810
Divestiture and other		(1,719	)		(4,029	)
Foreign currency adjustments		114			1,332
Intangible assets – finite life, net at end of period	$	985,553		$	100,986

In the second quarter of 2026, the Company shut down its Western Air Ducts business located in the United Kingdom. As a result, the Company recorded an impairment charge of $1.7 million related to finite life intangible assets. This was recorded to "Other operating expense (income)" on the Condensed Consolidated Statements of Operations. In the first quarter of 2025, the Company completed the divestiture of its Global Pump Solutions business, and recognized $4.0 million related to the removal of the net book value of its intangible assets. This was recorded to "Gain on sale of Global Pump Solutions business" on the Condensed Consolidated Statements of Operations.

Amortization expense of finite life intangible assets was $15.3 million and $6.1 million for the three months ended September 30, 2026 and 2025, respectively, and $27.1 million and $12.2 million for the nine months ended September 30, 2026 and 2025, respectively. Amortization over the next five years for finite life intangibles is expected to be $13.7 million for the remainder of 2026, $71.0 million in 2027, $68.2 million in 2028, $63.5 million in 2029, $62.7 million in 2030, and $706.5 million thereafter. The weighted average amortization periods for finite life intangible assets was 20.0 years as of September 30, 2026, inclusive of weighted average amortization periods for technology, customer relationships, and tradenames and other of 19.1, 21.3, and 18.6 years, respectively.

Annually during the fourth quarter, or more often as circumstances require, the Company completes an impairment assessment of its goodwill and indefinite life intangible assets at the reporting unit level. As a part of its annual assessment, the Company first qualitatively assesses whether current events or changes in circumstances lead to a determination that it is more likely than

not, defined as a likelihood of more than 50 percent, that the fair value of a reporting unit is less than its carrying amount. If there is a qualitative determination that the fair value of a particular reporting unit is more likely than not greater than its carrying value, the Company does not need to quantitatively test for impairment for that reporting unit. If this qualitative assessment indicates a more likely than not potential that the asset may be impaired, the estimated fair value is determined using a weighting of the income method and the market method. If the estimated fair value of a reporting unit is less than its carrying value, an impairment charge is recorded.

Additionally, property, plant and equipment, right-of-use assets, and finite life intangible assets are reviewed whenever events or changes in circumstances occur that indicate possible impairment. If events or changes in circumstances occur that indicate possible impairment, the impairment review is based on an undiscounted cash flows analysis at the lowest level at which cash flows of the long-lived assets are largely independent of other groups of assets and liabilities. When impairment is indicated, the estimated future cash flows are then discounted to determine the estimated fair value of the asset or asset group and an impairment charge is recorded for the difference between the carrying value and the estimated fair value.

The Company did not identify any other triggering events that would require an interim impairment assessment, or record an additional impairment of goodwill, indefinite life intangible assets, finite life intangible assets, right-of-use assets, or property, plant and equipment during the three or nine months ended September 30, 2026, other than as related to the Western Air Ducts business as discussed above.

The Company’s assumptions about future conditions important to its assessment of potential impairment are subject to uncertainty, and the Company will continue to monitor these conditions in future periods as new information becomes available and will update its analysis accordingly.

7. Accrued Expenses

Accrued expenses as of September 30, 2026 and December 31, 2025 consisted of the following:


(in thousands)	September 30, 2026		December 31, 2025
Contract liability	$	34,714	$	15,315
Compensation and related benefits		43,979		21,787
Accrued warranty		10,028		6,796
Short-term operating lease liability		9,026		4,642
Professional fees		12,233		1,908
Other		20,549		7,191
Total accrued expenses	$	130,529	$	57,639

8. Senior Debt

Debt as of September 30, 2026 and December 31, 2025 consisted of the following:


(in thousands)	September 30, 2026			December 31, 2025
Outstanding borrowings under Credit Facility (defined below)
Revolving credit facility	$	371,500		$	208,600
Term loan		232,063			—
Total outstanding borrowings under the Credit Facility		603,563			208,600
Outstanding borrowings under the joint venture term debt		4,249			5,647
Unamortized debt discount		(8,492	)		(1,809	)
Total outstanding borrowings		599,320			212,438
Less: current portion		(15,999	)		(1,879	)
Total debt, less current portion	$	583,321		$	210,559

Scheduled principal payments under the Credit Facility and joint venture term debt are $3.4 million for the remainder of 2026, $15.7 million in 2027, $14.7 million in 2028, $17.6 million in 2029, and $17.6 million in 2030, with the remainder due upon maturity in 2031. The Term Loan is payable in quarterly principal installments of $2.9 million through June 30, 2028, increasing to $4.4 million through December 31, 2030 with the remainder due upon maturity on January 30, 2031.

Credit Facility

On October 7, 2024, the Company entered into the Third Amended and Restated Credit Agreement (the “Legacy Credit Agreement”), among the Company, its subsidiaries from time to time party thereto, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent, which amended and restated in its entirety the Company’s prior credit agreement. The Legacy Credit Agreement provided for a senior secured revolving credit facility in an initial aggregate principal amount of up to $400.0 million (the "Legacy Credit Facility”).

On January 30, 2026, the Company entered into the Fourth Amended and Restated Credit Agreement (the “2026 Credit Agreement”), among the Company, its subsidiaries from time to time party thereto, the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent, which amended and restated in its entirety the Legacy Credit Agreement. The 2026 Credit Agreement provided for a senior secured revolving credit facility in an initial aggregate principal amount of up to $700.0 million.

On March 30, 2026, the Company entered into Amendment No. 1 to Fourth Amended and Restated Credit Agreement (the “Amendment”), among the Company, its subsidiaries party thereto, the lenders party thereto (the "Lenders"), and Bank of America, N.A., as administrative agent (the “Agent”), which amended the Credit Agreement (the 2026 Credit Agreement as amended by the Amendment, the “Credit Agreement”). The Amendment provided for a senior secured revolving credit facility in an initial aggregate principal amount of up to $740.0 million and added an incremental senior secured delayed-draw term loan commitment in an initial aggregate principal amount of $235 million (the “Incremental Term A-1 Loan Facility”; together with the Revolving Facility, the “Credit Facility”), subject only to the satisfaction or waiver of the related conditions precedent set forth in the Credit Agreement, including, without limitation, the consummation of the merger and acquisition contemplated by that certain Agreement and Plan of Merger, dated as of February 23, 2026, by and among the Company, Longhorn Merger Sub, Inc., Longhorn Merger Sub LLC, and Thermon.

On June 1, 2026, the Company borrowed $235.0 million on the Incremental Term A-1 Loan Facility.

As of September 30, 2026 and December 31, 2025, $24.2 million and $23.8 million of letters of credit were outstanding, under the Credit Facility, respectively. Total unused credit availability, in consideration of borrowing limitations, under the Company’s Credit Facility was $344.3 million and $123.6 million at September 30, 2026 and December 31, 2025, respectively. The Company's available borrowing capacity under the Credit Facility is defined as the lower of (a) the Credit Facility amount less outstanding borrowings and Letters of Credit on the Credit Facility, and (b) the Company's trailing twelve month EBITDA, as defined in the Credit Agreement, by a factor of the maximum leverage ratio, less outstanding borrowings on the Credit Facility. Revolving loans may be borrowed, repaid and reborrowed until January 30, 2031, at which time all outstanding balances of the Credit Facility must be repaid.

The Legacy Credit Facility accrued interest (a) with respect to base rate loans, at an annual rate equal to an applicable rate of between 0.75% and 2.25% (fluctuating based on the Company’s Consolidated Net Leverage Ratio), plus a rate equal to the highest of (1) the Agent’s prime rate, (2) the federal funds rate plus one-half of 1.00%, (3) Daily Simple SOFR (as defined in the Legacy Credit Agreement) plus 1.00% and (4) 1.00%, (b) for all other loans, at an annual rate equal to an applicable rate of between 1.75% and 3.25% (fluctuating based on the Company’s Consolidated Net Leverage Ratio), plus a rate determined based on the denominated currency and, as applicable pursuant to the Legacy Credit Agreement, whether the Company has elected for interest on such loans to accrue at a daily rate or a term rate: (a) for term rate loans, if denominated (1) in U.S. Dollars, Term SOFR (as defined in the Legacy Credit Agreement inclusive of a 0.10% per annum adjustment), (2) in euros, EURIBOR, (3) in Canadian dollars, the Term CORRA Rate (as defined in the Legacy Credit Agreement) plus 0.29547% for a one-month interest period and 0.32138% for a three-month interest period or (4) in a currency other than (1)-(3), the rate per annum as designated with respect to such currency at the time such currency was approved by the Agent and the other Lenders or, if such rate is unavailable on any date of determination for any reason, a comparable or successor rate approved by the Agent, and (b) for daily rate loans, if denominated (1) in U.S. dollars, Daily Simple SOFR (as defined in the Legacy Credit Agreement inclusive of a 0.10% per annum adjustment), (2) in pounds sterling, a rate per annum equal to SONIA (as defined in the Legacy Credit Agreement) plus 0.0326% per annum or (3) in a currency other than (1) or (2), the rate per annum as designated with respect to such currency at the time such currency was approved by the Agent and the other Lenders or, if such rate is unavailable on any date of determination for any reason, a comparable or successor rate approved by the Agent.

The Credit Facility accrues interest (a) with respect to base rate loans, at an annual rate equal to an applicable rate spread of between 0.50% and 2.00% (fluctuating based on the Company’s Consolidated Net Leverage Ratio, as defined in the Credit Agreement), plus a rate equal to the highest of (1) the Agent’s prime rate, (2) the federal funds rate plus one-half of 1.00%, (3) Daily Simple SOFR (as defined in the Credit Agreement) plus 1.00% and (4) 1.00%, (b) for all other loans, at an annual rate equal to an applicable rate spread of between 1.50% and 3.00% (fluctuating based on the Company’s Consolidated Net

Leverage Ratio), plus a rate determined based on the denominated currency and, as applicable pursuant to the Credit Agreement, whether the Company has elected for interest on such loans to accrue at a daily rate or a term rate: (a) for term rate loans, if denominated (1) in U.S. Dollars, Term SOFR (as defined in the Credit Agreement), (2) in euros, EURIBOR, (3) in Canadian dollars, the Term CORRA Rate (as defined in the Credit Agreement) plus 0.29547% for a one-month interest period and 0.32138% for a three-month interest period or (4) in a currency other than (1)-(3), the rate per annum as designated with respect to such currency at the time such currency was approved by the Agent and the other Lenders or, if such rate is unavailable on any date of determination for any reason, a comparable or successor rate approved by the Agent, and (b) for daily rate loans, if denominated (1) in U.S. dollars, Daily Simple SOFR (as defined in the Credit Agreement), (2) in pounds sterling, a rate per annum equal to SONIA (as defined in the Credit Agreement) plus 0.0326% per annum or (3) in a currency other than (1) or (2), the rate per annum as designated with respect to such currency at the time such currency was approved by the Agent and the other Lenders or, if such rate is unavailable on any date of determination for any reason, a comparable or successor rate approved by the Agent.

Interest on Base Rate loans is payable quarterly in arrears on the last day of each calendar quarter and at maturity. Interest on Term SOFR rate loans is payable on the last date of each applicable Interest Period (as defined in the Credit Agreement), but in no event less than once every three months and at maturity. The weighted average stated interest rate on outstanding borrowings was 6.16% and 6.41% at September 30, 2026 and December 31, 2025, respectively. The effective interest rate was 6.35% and 7.06% at September 30, 2026 and December 31, 2025, respectively.

With respect to financial covenants and the commencement of the Thermon acquisition, the Company is now required to maintain a Consolidated Net Leverage Ratio not greater than 4.5 to 1.00 with step downs to 4.25 to 1.00 on June 30, 2027 and 4.00 to 1.00 on December 31, 2027 and a Consolidated Secured Net Leverage Ratio (as defined in the Credit Agreement) not greater than 4.25 to 1.00 with step downs to 4.00 to 1.00 on June 30, 2027 and 3.50 to 1.00 on December 31, 2027, in each case as of the last day of each fiscal quarter of the Company. With the commencement of the Thermon acquisition, the Company is no longer required to maintain a Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) as of the last day of each fiscal quarter of the Company of not less than 1.25 to 1.00; and is now required to maintain a Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) as of the last day of each fiscal quarter of the Company of not less than 3.00 to 1.00.

The Company has granted a security interest in substantially all of its assets to secure its obligations pursuant to the Credit Facility. The Company’s obligations under the Credit Facility are guaranteed by the Company’s domestic subsidiaries and such guaranty obligations are secured by a security interest on substantially all the assets of such subsidiaries, including certain real property. The Company’s obligations under the Credit Facility may also be guaranteed by the Company’s material foreign subsidiaries to the extent no adverse tax consequences would result to the Company.

In connection with the 2026 Credit Agreement and the Amendment thereto and the related financing of the Thermon acquisition, the Company incurred $5.0 million in customary closing and underwriting fees associated with the revolving credit facility. These costs were deferred and are being amortized over the term of the amended facility. In connection with the Incremental Term A-1 Loan Facility, $2.7 million of deferred financing costs were recorded as debt issuance costs and are being amortized over the term of the Term A-1 Loan.

As of September 30, 2026 and December 31, 2025, the Company was in compliance with all related financial and other restrictive covenants under the Credit Facility.

Joint Venture Debt

On March 7, 2022, the PPI joint venture, for which the Company holds 63% of the equity, entered into a loan agreement secured by the assets of PPI in the aggregate principal amount of $11.0 million for the acquisition of General Rubber, LLC. As of September 30, 2026 and December 31, 2025, $4.2 million and $5.6 million was outstanding under the loan, respectively. Principal will be paid back to the lender monthly with the final installment due by February 27, 2027. Interest is accrued at the per annum rate based on PPI's choice of the 1/3/6 month Term SOFR rate plus 3.25%, with a floor rate of 3.75%. Interest is paid monthly on the last day of each month. The interest rate at September 30, 2026 and December 31, 2025 was 6.87% and 7.27%, respectively. As of September 30, 2026 and December 31, 2025, PPI was in compliance with all related financial and other restrictive covenants under this loan agreement. This loan balance does not impact the Company’s borrowing capacity or the financial covenants under the Credit Facility. As of September 30, 2026, there were $20.6 million in current assets (including $3.4 million of cash, $5.5 million of accounts receivable, and $5.0 million of inventories), $36.0 million in long-lived assets (including $32.0 million of goodwill and intangible assets), and $20.5 million in total liabilities (including $4.2 million of debt and $6.4 million of accounts payable and accrued expenses) related to PPI included in the Condensed Consolidated Balance Sheets. As of December 31, 2025, there were $20.7 million in current assets (including $1.9 million of cash, $10.4 million of

accounts receivable, and $4.3 million of inventories), $24.4 million in long-lived assets (including $23.9 million of goodwill and intangible assets), and $14.2 million in total liabilities (including $5.6 million of debt and $4.9 million of accounts payable and accrued expenses) related to PPI included in the Condensed Consolidated Balance Sheets. For the three months ended September 30, 2026 and 2025, PPI accounted for $13.2 million and $14.3 million in revenue, respectively, and $0.7 million and $0.8 million in net income, respectively, included in the Company's results. For the nine months ended September 30, 2026 and 2025, PPI accounted for $39.5 million and $37.7 million in revenue, respectively, and $1.6 million and $3.2 million in net income, respectively, included in the Company's results.

Other Debt

The Company maintains bank guarantee facilities and bilateral lines of credit in various countries that are supported by cash, letters of credit, pledged assets or collateral available under the Credit Facility. The Credit Facility allows letters of credit and bank guarantee issuances of up to $175.0 million towards bilateral lines of credit secured through pledged assets and collateral under the Credit Facility. As of September 30, 2026 and December 31, 2025, $38.9 million and $38.6 million in bank guarantees were outstanding, respectively. Separately, CECO had $12.6 million and $3.0 million outstanding as of September 30, 2026 and December 31, 2025, respectively, on all other lines of credit or other local collateral.

9. (Loss) Earnings per Share

The computational components of basic and diluted (loss) earnings per share for the three months ended September 30, 2026 and 2025 are as follows:


	Three months ended September 30,
(in thousands)	2026			2025
Numerator (for basic and diluted earnings per share)
Net (loss) income attributable to CECO Environmental Corp.	$	(2,018	)	$	1,499

Denominator
Basic weighted-average shares outstanding		58,554			35,360
Common stock equivalents arising from stock options and restricted stock awards		—			1,037
Diluted weighted-average shares outstanding		58,554			36,397

The computational components of basic and diluted (loss) earnings per share for the nine months ended September 30, 2026 and 2025 are as follows:


	Nine months ended September 30,
(in thousands)	2026			2025
Numerator (for basic and diluted earnings per share)
Net (loss) income attributable to CECO Environmental Corp.	$	(37,184	)	$	46,993

Denominator
Basic weighted-average shares outstanding		45,936			35,226
Common stock equivalents arising from stock options and restricted stock awards		—			1,323
Diluted weighted-average shares outstanding		45,936			36,549

Options and restricted stock units included in the computation of diluted earnings per share are calculated using the treasury stock method. For the three months ended September 30, 2026 and 2025, zero and zero, and for the nine months ended September 30, 2026 and 2025, zero and 0.3 million, respectively, of outstanding options and restricted stock units were excluded from the computation of diluted earnings per share due to their having an anti-dilutive effect. For the three and nine months ended September 30, 2026, the Company had a net loss. As a result, no potentially dilutive shares were included in the computation, as their inclusion would have been anti-dilutive. The shares that could potentially dilute earnings per share in the future were 2.0 million and 2.0 million for the three and nine months ended September 30, 2026.

Once a restricted stock unit vests, it is included in the computation of weighted average shares outstanding for purposes of basic and diluted earnings per share.

Common Stock Repurchase

On May 10, 2022, the Company's Board of Directors authorized a share repurchase program under which the Company was able to purchase up to $20.0 million of its outstanding shares of common stock through April 30, 2025. The authorization permitted the Company to repurchase shares in the open market, through accelerated share repurchases, block trades, Rule 10b5-1 trading plans or through privately negotiated transactions in accordance with applicable laws, rules and regulations. There were no shares repurchased under the program during the three or nine months ended September 30, 2025. This program expired during the second quarter of 2025.

10. Share-Based Compensation

The Company recognized $6.4 million and $3.3 million of expense related to share-based compensation during the three months ended September 30, 2026 and 2025, respectively, and $19.2 million and $9.5 million during the nine months ended September 30, 2026 and 2025, respectively, which was measured based upon the fair value of the awards at the grant date. Included in the year to date expense was $10.2 million of share-based compensation expense recognized in connection with the accelerated vesting of certain legacy Thermon equity awards triggered by the acquisition. This was recorded to "Acquisition and integration expense" on the Condensed Consolidated Statements of Operations.

The Company granted approximately 98,676 and 323,000 restricted stock units during the three months ended September 30, 2026 and 2025, respectively, and approximately 251,712 and 913,000 restricted stock units during the nine months ended September 30, 2026 and 2025, respectively. In addition, the Company granted 17,563 and 67,000 stock options during the nine months ended September 30, 2026 and 2025, respectively. No stock options were granted during the three months ended September 30, 2026 and 2025.

There were no options exercised during the three and nine months ended September 30, 2026 or 2025.

11. Income Taxes

The Company files income tax returns in various federal, state and local jurisdictions. Tax years from 2023 forward remain open for examination by Federal authorities. Tax years from 2018 forward remain open for all significant state and foreign authorities.

As of September 30, 2026 and December 31, 2025, the liability for uncertain tax positions totaled approximately $1.2 million and $1.2 million, respectively, which is included in “Other liabilities” on the Condensed Consolidated Balance Sheets. The Company recognizes accrued interest related to uncertain tax positions and penalties, if any, in income tax expense within the Condensed Consolidated Statements of Operations.

The Company’s undistributed foreign earnings are not permanently reinvested. The Company intends to repatriate foreign held cash as needed. The Company records deferred income tax attributable to foreign withholding taxes that would become payable should it decide to repatriate cash held in foreign subsidiaries. As of September 30, 2026 and December 31, 2025, the Company recorded deferred income taxes of approximately $3.2 million and $1.3 million, respectively, on the undistributed earnings of its foreign subsidiaries.

Income tax benefit was $1.0 million for the three months ended September 30, 2026, compared with income tax expense of $0.5 million for the three months ended September 30, 2025. Income tax benefit was $14.6 million for the nine months ended September 30, 2026 compared with income tax expense of $23.6 million for the nine months ended September 30, 2025. The effective income tax rate for the three months ended September 30, 2026 was 34.9% compared with 21.1% for the three months ended September 30, 2025, and the effective income tax rate for the nine months ended September 30, 2026 was 28.5% compared with 32.8% for the nine months ended September 30, 2025. The effective income tax rates for the three and nine months ended September 30, 2026 and 2025 differ from the United States federal statutory rate due to certain other permanent differences, including the gain on the sale of the Global Pump Solutions business, state income taxes, non-deductible transaction expenses and differences in tax rates among the foreign jurisdictions in which it operates.

The Organization for Economic Co-operation and Development/G20 Inclusive Framework on Base Erosion and Profit Shifting published the Pillar Two model rules designed to address the tax challenges arising from the digitalization of the global economy which introduces a 15% global minimum corporate tax for companies with revenues above €750 million calculated on a country-by-country basis. On February 1, 2023, the FASB indicated that it believes the minimum tax imposed under Pillar Two is an alternative minimum tax, and, accordingly, deferred tax assets and liabilities associated with the minimum tax would not be recognized or adjusted for the estimated future effects of the minimum tax but would be recognized in the period

incurred. Aspects of Pillar Two legislation have been enacted in certain jurisdictions in which the Company operates effective for accounting periods commencing on or after January 1, 2024. Historically, the Company has not met the Pillar Two revenue threshold, however with the acquisition of Thermon Group Holdings, Inc., the combined Company will meet the Pillar Two threshold in 2026. The Company expects to meet the Transitional Country-by-Country Safe Harbor rules.

12. Financial Instruments

The Company's financial instruments consist primarily of investments in cash and cash equivalents, receivables and certain other assets, notes payable, and accounts payable, which approximate fair value at September 30, 2026 and December 31, 2025, due to their short-term nature or variable, market-driven interest rates.

The fair value of the debt issued under the Credit Facility and joint venture term loan was $607.8 million and $214.2 million at September 30, 2026 and December 31, 2025, respectively. The fair value was determined considering market conditions, the Company's credit worthiness and the current terms of our debt, which is considered Level 2 on the fair value hierarchy.

At September 30, 2026 and December 31, 2025, the Company had cash and cash equivalents of $72.1 million and $33.1 million, respectively, of which $55.4 million and $26.4 million, respectively, was held outside of the United States, principally in China, Canada, India, Netherlands, United Arab Emirates, and United Kingdom.

13. Commitments and Contingencies

Legal Proceedings

The Company is subject to routine legal claims, proceedings, and investigations associated with contract and employment-related litigation matters, warranty claims, asbestos matters, and audits of state and local tax returns arising in the ordinary course of its business. Following the acquisition of Thermon on June 1, 2026, the Company has also assumed responsibility for legal matters associated with Thermon’s historical operations; however, none of such matters are believed to be material to the Company’s consolidated financial condition, results of operations, or liquidity. The final outcome and impact of open matters, and related claims and investigations that may be brought in the future, are subject to many variables, and cannot be predicted. The Company regularly assesses such matters to determine the degree of probability that it will incur a material loss as a result of such matters, as well as the range of possible loss. The Company records accruals for estimated losses relating to claims and lawsuits when available information indicates that a loss is probable and the amount of the loss, or range of loss, can be reasonably estimated.

Based upon information presently available, and in light of legal and other factual defenses available to the Company, the Company does not believe that it is reasonably possible that such litigation will have a material adverse effect on the Company’s financial condition, future operating results or liquidity.

14. Acquisitions

Thermon Group Holdings, Inc.

On June 1, 2026 (the “Closing Date”), the Company completed its merger (the "Merger") with Thermon Group Holdings, Inc. (“Thermon”), pursuant to the Agreement and Plan of Merger (the “Merger Agreement”) dated February 23, 2026, entered into by the Company with Longhorn Merger Sub, Inc. and Longhorn Merger Sub LLC, each a direct wholly owned subsidiary of the Company (together, the “Merger Subs”) and Thermon. Pursuant to the Merger Agreement, on the Closing Date, Merger Sub Inc. merged with and into Thermon (the “First Merger”), with Thermon surviving the First Merger as a wholly owned subsidiary of CECO. Immediately after the First Merger, Thermon merged with and into Merger Sub LLC (the “Second Merger”), with Merger Sub LLC surviving the Second Merger as a wholly owned subsidiary of CECO. In connection with the Second Merger, the name of the surviving entity was changed to Thermon Group Holdings, LLC. The First Merger and the Second Merger are collectively referred to as the “Merger.”

The Merger was accounted for as a business combination under ASC 805 Business Combinations, with the Company identified as the accounting acquirer. Concurrently with the execution of the Merger Agreement, on February 23, 2026, the Company entered into the financing (as further described in Note 8), which was also completed on June 1, 2026.

Under the terms of the Merger Agreement, each holder of Thermon common stock ("Thermon Common Stock", and "Thermon Shareholders") had the ability to elect to receive, for each share of Thermon Common Stock they own, one of the following forms of consideration: (i) consideration consisting of $10.00 in cash and 0.6840 shares of CECO common stock (“Mixed

Consideration”), (ii) consideration of $63.89 per share (“All-Cash Consideration”), or (iii) consideration of 0.8110 shares of CECO common stock per share (“All-Stock Consideration”), in each case subject to proration and allocation procedures designed to ensure that the aggregate amount of cash and stock paid in the transaction does not exceed certain limits specified in the Merger Agreement. Thermon Shareholders who did not make an election received the Mixed Consideration. The value of the Mixed Consideration, All-Cash Consideration, and All-Stock Consideration are all approximately $64 per share, based on the closing stock price of $79.03 per share of CECO on June 1, 2026, which represents an approximate 4.7% premium to the closing stock price of $61.14 per share of Thermon on its last day of trading on May 29, 2026. Per the Merger Agreement, Thermon’s existing restricted stock units (“RSU Awards”) and performance unit awards (“PU Awards”) were assumed by the Company and converted into awards based on the Company's common stock, while in‑the‑money stock options (“In-the-Money Options”) were cancelled in exchange for cash consideration equal to the All-Cash Consideration less the exercise price per share of Thermon Common Stock subject to the In-the-Money Options, as of immediately prior to the closing (the “Option Consideration”), and out‑of‑the‑money options were cancelled for no consideration. Under the provisions of the Merger Agreement, the Company elected to cancel the RSU Awards and PU Awards held by individuals residing or providing services outside the U.S. at closing (“Non-U.S. Award”), and pay cash consideration equal to the number of underlying shares multiplied by the per‑share All-Cash Consideration (“Non-U.S. Award Cash Consideration”). The following table summarizes the fair value of consideration transferred for the Merger:


(in thousands, except share and per share data)	Amount
Mixed Consideration (Mixed elections and non-electors)
Stock component
Number of Thermon's Common Stock shares		17,231,130
Exchange ratio per Merger Agreement		0.6840
Number of CECO Common Stock shares issued to Thermon shareholders		11,786,093
CECO Common Stock closing price as of June 1, 2026	$	79.03
Consideration in the form of CECO's Common Stock	$	931,455
Cash component
Number of Thermon's Common Stock shares		17,231,130
Per Share Cash Consideration	$	10.00
Consideration in form of cash	$	172,311
Total Mixed Consideration	$	1,103,766
Cash Consideration
Number of Thermon's Common Stock shares		2,142,408
Per share Cash Consideration	$	63.89
All-Cash Consideration	$	136,878
Cash issued due to Maximum Aggregate Stock Shares proration per the Merger Agreement	$	20,207
Total Cash Consideration	$	157,085
Stock Consideration
Number of Thermon's Common Stock shares		13,566,156
Exchange ratio per Merger Agreement		0.8110
Number of CECO Common Stock shares		11,002,153
Less: CECO Common Stock shares due to Maximum Aggregate Stock Shares proration per the Merger Agreement		(257,495	)
Number of CECO Common Stock shares issued pursuant to the Maximum Aggregate Stock Shares proration per the Merger Agreement		10,744,658
CECO Common Stock closing price as of June 1, 2026	$	79.03
Total Stock Consideration	$	849,150
Fractional Shares	$	68
Total Merger Consideration per the Merger Agreement	$	2,110,069
Pre-combination value of replaced Thermon equity awards	$	11,609
Cash settlement of Thermon equity awards	$	2,111
Repayment of Thermon indebtedness	$	141,682
Less: D&O tail insurance premium	$	(1,371	)
Total preliminary consideration transferred	$	2,264,100

The purchase price was allocated, on a preliminary basis, among assets acquired and liabilities assumed based on available information. The determination of the estimated fair value of assets acquired requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, royalty rates, customer attrition rates, asset lives, and market multiples, among other items. Fair values were determined by management using a variety of methodologies and resources, including external independent valuation experts. The valuation methods consisted of multi-period excess earnings, relief from royalty, current replacement cost, and other valuation techniques to determine the fair value of assets acquired and liabilities assumed.

The Company preliminarily recognized fair values of the assets acquired and liabilities assumed and allocated $1,214.5 million to goodwill. This purchase price allocation reflects a $4.0 million increase to goodwill, primarily related to a revision to the Company's valuation of acquired inventory identified during the three months ended September 30, 2026. Goodwill primarily represents expected synergies from combining operations, expanded market opportunities, acquired workforce, future technologies, and other benefits that do not qualify for separate recognition. Goodwill is not expected to be deductible for income tax purposes.

The preliminary allocation of the purchase price is subject to change as the Company continues to obtain and assess relevant information that existed as of the acquisition date. A final determination of the fair value of assets acquired, including any identifiable intangible assets, and liabilities assumed will be performed within one year of the Closing Date. The preliminary allocation of the total estimated purchase consideration is as follows:


(in thousands)	Preliminary Fair Value
Total preliminary consideration transferred	$	2,264,100
Assets
Cash and cash equivalents		35,724
Restricted cash		5,831
Accounts receivable		103,832
Costs and estimated earnings in excess of billings on uncompleted contracts		28,138
Inventories		156,163
Prepaid expenses and other current assets		10,182
Prepaid income taxes		1,235
Property, plant and equipment		129,785
Right-of-use assets from operating leases		15,097
Intangible assets – finite life		911,000
Deferred charges and other assets		11,681
Total assets	$	1,408,668
Liabilities
Accounts payable		37,569
Accrued liabilities		79,893
Billings in excess of costs and estimated earnings on uncompleted contracts		8,349
Income taxes payable		3,114
Deferred income tax liability		208,388
Operating lease liabilities		12,334
Other liabilities		9,438
Total liabilities		359,085
Net assets		1,049,583
Goodwill	$	1,214,517

Acquired intangible assets consisted of the following:


(in thousands)	Amount
Technology		195,000
Customer relationships		570,000
Tradenames		120,000
Backlog		26,000
Total acquired intangible assets	$	911,000

Acquired intangible assets are amortized on a straight line or accelerated basis over their estimated useful lives of approximately 20 years for technology, 20 to 25 years for customer relationships, 20 years for tradenames, and 3 years for customer backlog. During the three months ended September 30, 2026, Thermon accounted for $148.5 million in revenue, and $28.6 million in net loss, in the Company's results. From the June 1, 2026 Closing Date through September 30, 2026, Thermon accounted for $198.1 million in revenue, and $33.9 million in net loss, in the Company's results. Thermon's net loss includes the impact of $14.3 million of intangible amortization from the Closing Date through September 30, 2026, as well as a $26.2 million charge related to the recognition of costs stemming from the step up of fair value of inventory.

Total acquisition-related costs related to the Thermon acquisition of $0.0 million and $34.3 million were reported in "Acquisition and integration expense" on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2026.

Flexible Specialty Products LLC

On February 13, 2026, the Company, through its PPI JV, completed its acquisition of FSP for $6.8 million in cash. The transaction was financed through cash on hand. As additional consideration in the acquisition of FSP, the former owners of FSP are also entitled to earn-out payments up to $4.0 million based upon specified financial results through December 31, 2029. Based on projections at the acquisition date, the Company estimated the fair value of the earn-out to be $3.3 million. FSP is a custom manufacturer and supplier of industrial fabric expansion joints, metal bellows, metal hose, and other specialty flexible connectors for ductwork and piping with its primary operations in Englewood, Florida and is reported within the Engineered Systems segment. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the date of closing.


(in thousands)
Current assets (including cash of $134 and accounts receivable of $861)	$	1,420
Intangible - finite life		6,050
Goodwill		2,671
Other assets		447
Total assets acquired		10,588
Current liabilities assumed		(247	)
Other liabilities assumed		(291	)
Net assets acquired	$	10,050

The Company acquired customer relationships intangible assets valued at $6.1 million. This asset was determined to have a useful life of 10 years.

During the three and nine months ended September 30, 2026, FSP accounted for $1.2 million and $3.0 million in revenue, respectively, and $(0.1) million and $0.6 million in net income (loss), respectively, in the condensed consolidated results.

Profire Energy, Inc.

On January 3, 2025, the Company acquired all outstanding shares of Profire for $122.7 million in cash, including $4.6 million of cash used to settle outstanding equity awards for which $2.3 million represents the acceleration of such awards and thus recorded within "Acquisition and integration expenses" on the Condensed Consolidated Statements of Operations. Resulting consideration transferred for the acquisition was $120.4 million. The transaction was financed through a combination of cash on hand and a draw on the Company's revolving credit facility. Profire is a technology company and provider of intelligent control solutions that enhance the efficiency, safety, and reliability of industrial combustion appliances. The business operates primarily from locations in Lindon, Utah and Acheson, Alberta and is reported within the Engineered Systems segment. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the date of closing.


(in thousands)
Current assets (including cash and cash equivalents of $22,675 and accounts receivable of $14,151)	$	54,867
Property and equipment		17,416
Intangible - finite life		41,810
Goodwill		25,572
Other assets		801
Total assets acquired		140,466
Current liabilities assumed		(8,567	)
Deferred income tax liability		(11,226	)
Other liabilities assumed		(291	)
Net assets acquired	$	120,382

The Company acquired property and equipment consisting of $14.7 million of land, building and improvements, $2.1 million of vehicles, and $0.6 million of machinery and equipment and other.

The Company acquired technology, customer relationship, and tradename intangible assets valued at $3.6 million, $34.5 million, and $3.7 million, respectively. These assets were determined to have useful lives of 7, 10, and 10 years, respectively.

The acquisitions disclosed above, with the exception of Profire, are subject to final adjustment, primarily for the valuation of intangible assets pending final valuation results, working capital, and tax balances for the further assessment of the acquiree’s tax positions. These preliminary estimates and assumptions could change significantly during the purchase price measurement period as the Company finalizes the valuation of assets acquired and liabilities assumed. These changes could result in material variances in the Company's future financial results, including variances in the estimated purchase price, fair values recorded and expenses associated with these items.

Goodwill recognized represents value the Company expects to be created by combining the various operations of the acquired businesses with the Company’s operations, including the expansion into markets within existing business segments, access to new customers and potential cost savings and synergies. Goodwill related to these acquisitions is not deductible for tax purposes. Acquisition and integration expenses, which include retention, legal, accounting, banking, and other expenses, are recorded within "Acquisition and integration expense" in the Condensed Consolidated Statements of Operations.

The unaudited supplemental pro forma information is based on estimates and assumptions that the Company believes are reasonable and reflects the effects of the Thermon acquisition and related financing, including the recognition of certain cost of sales and acquired intangible assets, depreciation of acquired property, plant and equipment, amortization of the prepaid directors' and officers' ("D&O") liability insurance tail policy required under the Merger Agreement, incremental share-based compensation expense associated with the conversion and cash settlement of Thermon equity awards, and incremental interest expense, including the amortization of deferred financing costs. Material, nonrecurring pro forma adjustments directly attributable to the Thermon acquisition include transaction costs of $34.3 million that were incurred during the nine months ended September 30, 2026, which are assumed to have occurred on the pro forma closing date of January 1, 2025 and recognized as if incurred in the first quarter of 2025.

The unaudited supplemental pro forma information is presented for informational purposes only and does not purport to represent what the Company's results of operations would have been had the acquisition of Thermon and the related financing occurred on January 1, 2025, nor is it necessarily indicative of future operating results.


	Three months ended September 30,				Nine months ended September 30,
(in thousands, except per share data)	2026		2025		2026		2025
Net sales	$	404,428	$	329,322	$	1,118,442	$	934,388
Net income (loss) attributable to CECO Environmental Corp.		13,892		1,890		25,895		(18,181	)

15. Divestiture

On March 31, 2025, the Company finalized the sale of its Global Pump Solutions business to a third party for a purchase price of $108.7 million, as adjusted for purchase adjustments. In the third quarter of 2025, the Company agreed to a working capital adjustment with the purchaser that reduced the amount to be released from escrow by $0.8 million, with a corresponding reduction in the previously recognized gain. The Company received cash proceeds of $107.9 million, inclusive of the purchase

price, purchase price adjustments and $2.0 million released from escrow in the third quarter of 2025. The Company recognized a pre-tax gain on sale of business of $63.7 million. The Global Pump Solutions business consisted of three niche leadership severe service industrial metallic, fiberglass and thermoplastic centrifugal pump brands: Dean, Fybroc and Sethco. The business primarily operated from locations in Indianapolis, Indiana and Telford, Pennsylvania, and was included within the Industrial Process Solutions segment.

Amounts related to the transaction are as follows:


(in thousands)
Proceeds from sale of Global Pump Solutions business	$	107,808
Less: Assets transferred
Accounts receivable, net		(4,230	)
Inventories		(9,268	)
Property and equipment		(5,247	)
Goodwill		(26,838	)
Intangible assets – finite life, net		(4,029	)
Pension plan assets		(425	)
Other assets		(119	)
Less: Transaction costs		(616	)
Plus: Liabilities transferred
Accounts payable		1,024
Accrued expenses		1,731
Other liabilities assumed		3,910
Gain on sale of Global Pump Solutions business	$	63,701

16. Business Segment Information

The Company’s operations are organized and reviewed by management along its product lines or end markets that the segment serves and are presented in three reportable segments. Segment profit is reviewed quarterly by the chief operating decision maker ("CODM"), which is the Company's Chief Executive Officer, for the purposes of allocating resources, including personnel, capital, and financial resources, and assessing performance, including the monitoring of budget versus actual results. During the fourth quarter of 2025, management updated the definition of the segment profit measure used by the CODM. The presentation of prior period segment information has been recast to conform to this updated measure. During the second quarter of 2026, the Thermal Solutions segment was created following the acquisition of Thermon. Asset information by segment is not reported internally or otherwise regularly reviewed by the CODM.

The Company’s reportable segments are organized as groups of similar products and services, as described as follows:

Engineered Systems: The Company's Engineered Systems segment serves the power generation, hydrocarbon processing, water/wastewater treatment, oily water separation and treatment, marine and naval vessels, and midstream oil and gas sectors. The Company seeks to address the global demand for environmental and equipment protection solutions with its highly engineered platforms including emissions management, fluid bed cyclones, thermal acoustics, separation and filtration, and dampers and expansion joints.

Industrial Process Solutions: The Company's Industrial Process Solutions segment serves the broad industrial sector with solutions for air pollution and contamination control, fluid handling, and process filtration in applications such as aluminum beverage can production, automobile production, food and beverage processing, semiconductor fabrication, electronics production, steel and aluminum mill processing, wood manufacturing, desalination, and aquaculture markets. The Company assists customers in maintaining clean and safe operations for employees, reducing energy consumption, minimizing waste for customers, and meeting regulatory standards for toxic emissions, fumes, volatile organic compounds, and odor elimination through its platforms including duct fabrication and installation, industrial air, and fluid handling.

Thermal Solutions: The Company's Thermal Solutions segment serves the general industrial, chemical and petrochemical, oil, gas, power generation, commercial, food and beverage processing, and rail and transit sectors. The Company, through this segment, offers a full suite of products including heating units, electrode and gas-fired boilers, heating cables, industrial heating blankets and related products, temporary power solutions and tubing bundles, engineering, installation and maintenance services, and software design optimization and wireless and network control systems.

A reconciliation of total segment sales to total consolidated sales, as well as total segment profit from operations to total consolidated net loss before taxes is as follows for the three months ended September 30, 2026:


(in thousands)	Thermal Solutions			Engineered Systems		Industrial Process Solutions		Total
Net sales	$	148,463		$	194,257	$	61,708	$	404,428
Direct cost of sales		106,868			117,102		43,442
Shop burden		(229	)		4,904		2,241
Selling expense		11,317			8,194		2,795
Project engineering expense		2,506			4,650		2,489
General and administrative expense		20,864			9,361		1,355
Segment profit		7,137			50,046		9,386		66,569
Share-based compensation									6,397
Amortization of intangible assets									15,316
Other corporate expenses(1)									34,329
Interest expense									11,060
Other profit or loss(2)									2,402
Total consolidated loss before income taxes								$	(2,935	)

(1) Includes acquisition and integration expense, corporate compensation, professional services and information technology expenses, and other general and administrative corporate expenses.
(2) Includes foreign exchange (gain) loss.


(in thousands)	Thermal Solutions		Engineered Systems		Industrial Process Solutions		Total
Net sales	$	198,069	$	518,466	$	178,773	$	895,308
Direct cost of sales		144,956		323,066		124,128
Shop burden		370		13,899		8,401
Selling expense		15,079		24,780		8,802
Project engineering expense		3,356		12,960		7,192
General and administrative expense		25,659		27,893		5,507
Segment profit		8,649		115,868		24,743		149,260
Share-based compensation								19,245
Amortization of intangible assets								27,108
Other corporate expenses(1)								123,693
Interest expense								24,392
Other profit or loss(2)								6,082
Total consolidated loss before income taxes							$	(51,260	)

Other segment information is as follows for the three and nine months ended September 30, 2026:


	Three months ended September 30, 2026
(in thousands)	Thermal Solutions		Engineered Systems		Industrial Process Solutions
Property and equipment additions	$	2,563	$	1,090	$	389
Depreciation and amortization(1)		16,460		3,310		2,302


	Nine months ended September 30, 2026
(in thousands)	Thermal Solutions		Engineered Systems		Industrial Process Solutions
Property and equipment additions	$	4,319	$	2,915	$	703
Depreciation and amortization(1)		20,788		10,060		6,734

(1) The amounts of depreciation and amortization disclosed by reportable segment are included within other segment expense captions, such as shop burden or general and administrative expense.

A reconciliation of total segment sales to total consolidated sales, as well as total segment profit to total consolidated net income before taxes is as follows for the three months ended September 30, 2025:


(in thousands)	Engineered Systems		Industrial Process Solutions		Total
Net sales	$	143,692	$	53,907	$	197,599
Direct cost of sales		90,352		35,698
Shop burden		4,003		2,957
Selling expense		7,813		3,080
Project engineering expense		4,183		2,843
General and administrative expense		7,513		2,428
Loss (gain) on sale of Global Pump Solutions business		—		801
Segment profit		29,828		6,101		35,929
Share-based compensation						3,273
Amortization of intangible assets						6,144
Other corporate expenses(1)						17,112
Interest expense						5,054
Other profit or loss(2)						2,056
Total consolidated income before income taxes					$	2,290

(1) Includes corporate compensation, professional services and information technology expenses, and other general and administrative corporate expenses.
(2) Includes foreign exchange (gain) loss.

A reconciliation of total segment sales to total consolidated sales, as well as total segment profit to total consolidated net income before taxes is as follows for the nine months ended September 30, 2025:


(in thousands)	Engineered Systems		Industrial Process Solutions			Total
Net sales	$	392,586	$	167,102		$	559,687
Direct cost of sales		240,056		107,414
Shop burden		10,272		8,081
Selling expense		23,578		9,667
Project engineering expense		13,641		8,518
General and administrative expense		25,738		8,975
Gain on sale of Global Pump Solutions business		—		(63,701	)
Segment profit		79,300		88,147			167,447
Share-based compensation							9,507
Amortization of intangible assets							12,177
Other corporate expenses(1)							56,432
Interest expense							16,169
Other profit or loss(2)							1,196
Total consolidated income before income taxes						$	71,966

(1) Includes corporate compensation, professional services and information technology expenses, and other general and administrative corporate expenses.
(2) Includes foreign exchange (gain) loss and pension expense.

Other segment information is as follows for the three and nine months ended September 30, 2025:


	Three months ended September 30, 2025				Nine months ended September 30, 2025
(in thousands)	Engineered Systems		Industrial Process Solutions		Engineered Systems		Industrial Process Solutions
Property and equipment additions	$	1,649	$	429	$	2,855	$	1,390
Depreciation and amortization(1)		5,333		1,814		9,432		6,002

(1) The amounts of depreciation and amortization disclosed by reportable segment are included within other segment expense captions, such as shop burden or general and administrative expense.

Geographic Information

Net sales by geographic area are as follows:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2026		2025		2026		2025
United States	$	242,251	$	137,119	$	559,416	$	367,993
Netherlands		35,813		17,773		79,587		44,762
Canada		54,734		4,828		77,814		15,575
China		24,756		9,011		58,125		37,368
United Kingdom		13,328		11,843		38,006		43,870
Other		33,546		17,025		82,360		50,119
Total net sales	$	404,428	$	197,599	$	895,308	$	559,687

The geographical area data for net sales is based upon the country location of the Company's business unit generating such sales.

Non-current assets by geographic area are as follows:


(in thousands)	September 30, 2026		December 31, 2025
United States	$	2,545,457	$	359,584
China		42,336		39,205
United Kingdom		24,734		27,761
Canada		64,256		8,492
Other		66,177		48,545
Total long-lived assets	$	2,742,960	$	483,587

17. Subsequent Events

Transfer of Primary Listing of Common Stock to the Texas Stock Exchange LLC

On October 2, 2026, the Company, acting pursuant to authorization from its Board of Directors, notified the Nasdaq Global Select Market ("Nasdaq") of its intention to voluntarily withdraw the primary listing of its common stock, par value $0.01 per share, from Nasdaq and transfer the primary listing to the Texas Stock Exchange LLC ("TXSE"). The Company's common stock ceased trading on Nasdaq at the market close on Friday, October 16, 2026, and began trading on TXSE at the market open on Monday, October 19, 2026. The Company's common stock continues to trade under the ticker symbol "CECO" and retains its existing CUSIP.

CECO ENVIRONMENTAL CORP.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Company’s Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2026 and 2025 reflect the consolidated operations of the Company and its subsidiaries.

CECO Environmental Corp. (“CECO,” “we,” “us,” "our," or the “Company”) is a leading environmentally focused, diversified industrial company, serving the broad landscape of industrial air, industrial water and energy transition markets globally providing innovative technology and application expertise through a collection of focused operating companies with niche leadership positions and well-established brands in fragmented markets with flexible business models and established supply chains. CECO helps companies grow their business with safe, clean, and more efficient solutions that help protect people, the environment and industrial equipment. CECO's solutions improve air and water quality, optimize emissions management, and increase the energy and process efficiency for highly engineered applications in power generation, midstream and downstream hydrocarbon processing and transport, chemical processing, electric vehicle production, polysilicon fabrication, semiconductor and electronics production, battery production and recycling, specialty metals, aluminum and steel production, beverage can manufacturing, and industrial and produced water and wastewater treatment, and a wide range of other industrial end markets.

On February 23, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Longhorn Merger Sub, Inc. and Longhorn Merger Sub LLC, each a direct wholly owned subsidiary of the Company (together, the “Merger Subs”), and Thermon Group Holdings, Inc. (“Thermon”), pursuant to which the parties agreed to effect the merger transactions contemplated thereby. On June 1, 2026, the Company consummated the previously announced merger with Thermon in accordance with the terms of the Merger Agreement. The cash portion of the merger consideration and related transaction costs were funded with available cash and borrowings under the Company's existing credit facilities. For additional details, see Note 14 to the unaudited condensed consolidated financial statements within Item 1 of this Quarterly Report on Form 10-Q. The acquisition of Thermon significantly impacts the comparability of the Company’s results of operations, financial condition, and cash flows for the three and nine months ended September 30, 2026 compared to the corresponding prior-year periods.

Market Pressures

The senior management team monitors and manages the Company's ability to operate effectively as the result of market pressures. Against the current backdrop of a rapidly evolving global commercial environment, we believe we are comparatively well-positioned as we execute and manufacture a majority of our business in the same regions in which we sell, with our cost and revenue bases largely aligned as a result. Recently, international trade has been impacted by conflict in the Middle East and geopolitical tariff considerations. To mitigate potential impacts from further escalation of conflict in the Middle East, we have implemented contingency planning measures and continue to assess potential effects on our operations, supply chain, and financial results. To mitigate potential tariff-related impacts, we have worked strategically with customers and suppliers to optimize terms and pricing, sourcing locations, and logistics routes and schedules. While we will continue to take a proactive approach on our efforts to mitigate the impacts of these matters, our business and results could be adversely affected by further policy developments. Additionally, we could experience shortages of raw materials and inflationary pressures for certain materials and labor. We have secured raw materials from existing and alternate suppliers and have taken other mitigating actions to mitigate supply disruptions; however, we cannot guarantee that we will be able to continue to do so in the future. If we are unable to continue to mitigate the effects of these supply disruptions and/or inflationary pressures, our business, results and financial condition could be adversely affected.

Note Regarding Use of Non-GAAP Financial Measures

The Company's unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These GAAP financial statements include certain charges the Company believes are not indicative of its core ongoing operational performance.

As a result, the Company provides financial information in this Management’s Discussion and Analysis that was not prepared in accordance with GAAP and should not be considered as an alternative to the information prepared in accordance with GAAP. The Company provides this non-GAAP financial information because the Company’s management utilizes it to evaluate its ongoing financial performance and the Company believes it provides greater transparency to investors as supplemental information to its GAAP results.

The Company has provided the non-GAAP financial measures of non-GAAP operating income and non-GAAP operating margin as a result of items that the Company believes are not indicative of its ongoing operations. These include transactions associated with the Company’s acquisitions, divestiture, and the items described below in “Consolidated Results.” The Company believes that these items are not necessarily indicative of the Company’s ongoing operations and their exclusion provides individuals with additional information to better compare the Company's results over multiple periods. The Company utilizes this information to evaluate its ongoing financial performance. The Company has incurred substantial expense and income associated with acquisitions. While the Company cannot predict the exact timing or amounts of such charges, it does expect to treat the financial impact of these transactions as special items in its future presentation of non-GAAP results.

Results of Operations

Consolidated Results

Our Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2026 and 2025 are as follows:


	Three months ended September 30,						Nine months ended September 30,
(in millions, except ratios)	2026			2025			2026			2025
Net sales	$	404.4		$	197.6		$	895.3		$	559.7
Cost of sales		274.3			133.0			614.8			365.8
Gross profit	$	130.1		$	64.6		$	280.5		$	193.9
Percent of sales		32.2	%		32.7	%		31.3	%		34.6	%
Selling and administrative expense		91.2			47.0			201.2			149.4
Percent of sales		22.6	%		23.8	%		22.5	%		26.7	%
Amortization expense		15.3			6.1			27.1			12.2
Acquisition and integration expense		12.4			0.3			68.2			8.4
Loss (gain) on sale of Global Pump Solutions business		—			0.8			—			(63.7	)
Other operating expense (income), net		0.6			1.0			4.8			(1.7	)
Operating (loss) income	$	10.5		$	9.4		$	(20.8	)	$	89.3
Operating margin		2.6	%		4.8	%		(2.3	)%		16.0	%
Other expense, net	$	2.4		$	2.0		$	6.0		$	1.2
Interest expense		11.0			5.1			24.4			16.1
(Loss) income before income taxes	$	(2.9	)	$	2.3		$	(51.2	)	$	72.0
Income tax (benefit) expense		(1.0	)		0.5			(14.6	)		23.6
Net (loss) income	$	(1.9	)	$	1.8		$	(36.6	)	$	48.4
Noncontrolling interest		0.1			0.3			0.5			1.4
Net (loss) income attributable to CECO Environmental Corp.	$	(2.0	)	$	1.5		$	(37.2	)	$	47.0

To compare operating performance between the three and nine months ended September 30, 2026 and 2025, the Company has adjusted GAAP operating (loss) income to exclude (1) amortization of intangible assets, (2) acquisition and integration expenses, which include legal, accounting, and other expenses, (3) gain on the sale of the Global Pump Solutions business as discussed in Note 15, and (4) other expenses, including restructuring expenses primarily relating to severance, facility exits, and associated legal expenses, asbestos litigation expenses relating to future settlement payments, executive transition expenses, purchase accounting inventory adjustments, and third party professional consulting fees associated with Enterprise Resource Planning system implementations.

The following table presents the reconciliation of GAAP operating (loss) income and GAAP operating margin to non-GAAP operating income and non-GAAP operating margin:


	Three months ended September 30,						Nine months ended September 30,
(in millions, except ratios)	2026			2025			2026			2025
Operating income (loss) as reported in accordance with GAAP	$	10.5		$	9.4		$	(20.8	)	$	89.3
Operating margin in accordance with GAAP		2.6	%		4.8	%		(2.3	)%		16.0	%
Amortization expense		15.3			6.1			27.1			12.2
Acquisition and integration expense		12.4			0.3			68.2			8.4
Loss (gain) on sale of Global Pump Solutions business		—			0.8			—			(63.7	)
Other expense (income)1		17.5			0.9			31.1			(1.7	)
Non-GAAP operating income	$	55.7		$	17.5		$	105.6		$	44.5
Non-GAAP operating margin		13.8	%		8.9	%		11.8	%		8.0	%

(1) includes $16.7 million and $26.2 million related to the inventory fair value adjustment for the three and nine months ended September 30, 2026.

Net sales for the three months ended September 30, 2026 increased $206.8 million, or 104.7%, to $404.4 million compared with $197.6 million for the three months ended September 30, 2025, inclusive of organic growth of 41%. Approximately 63% of net sales

for the three months ended September 30, 2026 is attributable to organic revenue, which the Company defines as revenue from businesses owned for more than twelve months. The increase in organic revenue is driven by strong order intake in preceding quarters, which contributes to the backlog position. During the quarter, the Company continued to execute customer projects and satisfy contractual commitments without experiencing material delays. The largest contributor to organic revenue growth is demand for products and solutions serving power generation end markets. The remainder of the increase in net sales is attributable to the recent acquisition and integration of Thermon.

Net sales for the nine months ended September 30, 2026 increased $335.6 million, or 60.0%, to $895.3 million compared with $559.7 million for the nine months ended September 30, 2025, inclusive of organic growth of 42%. The increase in organic revenue is driven by significant order intake in the preceding quarters which led to a record backlog position. The Company executed customer projects in accordance with contractual commitments without experiencing material delays. The largest driver of organic revenue is demand for products and solutions supporting power generation end markets. The remainder of the increase in net sales is attributable to the Company’s recent integration of Thermon.

Gross profit increased $65.5 million, or 101.4%, to $130.1 million in the three months ended September 30, 2026 compared with $64.6 million in the three months ended September 30, 2025. The increase in gross profit is primarily attributable to the increase in sales volume as described above. Gross profit as a percentage of sales decreased to 32.2% in the three months ended September 30, 2026 compared with 32.7% in the three months ended September 30, 2025. Gross profit for the three months ended September 30, 2026 was reduced by $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% for the three months ended September 30, 2026. Gross profit margins excluding Thermon increased to 34.5% driven by margin expansion for products in power generation.

Gross profit increased $86.6 million, or 44.7%, to $280.5 million in the nine months ended September 30, 2026 compared with $193.9 million in the nine months ended September 30, 2025. The increase in gross profit is primarily attributable to the increase in sales volume as described above. Gross profit as a percentage of sales decreased to 31.3% in the nine months ended September 30, 2026 compared with 34.6% in the nine months ended September 30, 2025. The decrease is primarily attributable to $26.2 million of additional cost of sales related to the fair value adjustment to inventory acquired in the Thermon acquisition. Project mix and the timing of project completions within the power generation and industrial solutions end markets also contributed to the decrease. Adjusted gross profit margin was 34.3% for the nine months ended September 30, 2026 and excludes acquisition-related costs associated with the Thermon acquisition.

Selling and administrative expenses were $91.2 million for the three months ended September 30, 2026 compared with $47.0 million for the three months ended September 30, 2025. The increase is primarily attributable to selling and administrative expenses associated with the Thermon acquisition.

Selling and administrative expenses were $201.2 million for the nine months ended September 30, 2026 compared with $149.4 million for the nine months ended September 30, 2025. The increase is primarily attributable to selling and administrative expenses associated with the Thermon acquisition, partially offset by lower selling and administrative expenses within the Industrial Process Solutions segment, primarily reflecting the absence of the Global Pump Solutions business following its divestiture on March 31, 2025.

Amortization expense was $15.3 million for the three months ended September 30, 2026 compared with $6.1 million for the three months ended September 30, 2025. The increase in expense is predominantly related to amortization of intangible assets related to the Thermon acquisition.

Amortization expense was $27.1 million for the nine months ended September 30, 2026 compared with $12.2 million for the nine months ended September 30, 2025. The increase in expense is predominantly related to amortization of intangible assets related to the Thermon acquisition.

Operating income increased $1.1 million to $10.5 million for the three months ended September 30, 2026 compared with operating income of $9.4 million for the three months ended September 30, 2025. The increase in operating income is primarily attributable to the increased volume described above partially offset by higher amortization expense and acquisition and integration expenses associated with Thermon.

Operating income decreased $110.1 million to $(20.8) million for the nine months ended September 30, 2026 compared with operating income of $89.3 million for the nine months ended September 30, 2025. The decrease in operating income is primarily attributable to the gain on the sale of the Global Pump Solutions business recognized in the first quarter of 2025 and acquisition and integration expenses associated with Thermon partially offset by increased volume.

Non-GAAP operating income was $55.7 million for the three months ended September 30, 2026 compared with $17.5 million for the three months ended September 30, 2025. Non-GAAP operating income as a percentage of sales increased to 13.8% for the three months ended September 30, 2026 from 8.9% for the three months ended September 30, 2025. The increase in non-GAAP operating income is driven by the increase in gross profit, partially offset by the increase in selling and administrative expenses as described above

Non-GAAP operating income was $105.6 million for the nine months ended September 30, 2026 compared with $44.5 million for the nine months ended September 30, 2025. Non-GAAP operating income as a percentage of sales was increased to 11.8% for the nine months ended September 30, 2026 from 8.0% for the nine months ended September 30, 2025. The increase in non-GAAP operating income is driven by the increase in gross profit, partially offset by the increase in selling and administrative expenses as described above.

Interest expense increased to $11.1 million in the three months ended September 30, 2026 compared with interest expense of $5.1 million for the three months ended September 30, 2025. The increase in interest expense is primarily due to increased debt balances.

Interest expense increased to $24.4 million in the nine months ended September 30, 2026 compared with interest expense of $16.2 million for the nine months ended September 30, 2025. The increase in interest expense is primarily due to increased debt balances.

Income tax benefit was $1.0 million for the three months ended September 30, 2026 compared with income tax expense of $0.5 million for the three months ended September 30, 2025. Income tax benefit was $14.6 million for the nine months ended September 30, 2026 compared with income tax expense of $23.6 million for the nine months ended September 30, 2025. The effective income tax rate for the three months ended September 30, 2026 was 34.9% compared with 21.1% for the three months ended September 30, 2025. The effective income tax rate for the nine months ended September 30, 2026 was 28.5% compared with 32.8% for the nine months ended September 30, 2025. The effective income tax rates for the three and nine months ended September 30, 2026 and September 30, 2025 differ from the United States federal statutory rate. The Company's effective tax rate is affected by other permanent differences, including the gain on the sale of the Global Pump Solutions business, state income taxes, non-deductible transaction expenses, non-deductible incentive stock-based compensation, and differences in tax rates among the foreign jurisdictions in which it operates.

Orders booked increased $544.7 million, or 234%, to $777.6 million during the three months ended September 30, 2026 compared with $232.9 million in the three months ended September 30, 2025, inclusive of organic growth of 174%, as defined as the change in orders excluding the impact of orders recorded in the twelve month period subsequent to acquisition dates. The increase is primarily driven by demand for the Company’s emissions and exhaust systems applications supporting large-scale natural gas power generation projects.

Orders booked increased $1,290.6 million, or 176%, to $2,025.6 million during the nine months ended September 30, 2026 compared with $735.0 million in the nine months ended September 30, 2025, inclusive of organic growth of 161%. The increase is primarily driven by demand for the Company’s emissions and exhaust system applications supporting large-scale natural gas power generation projects.

Business Segments

The Company’s operations are organized and reviewed by management along its product lines and end markets that the segment
serves and are presented in three reportable segments. The results of the segments are reviewed through segment profit, which represents income from operations as adjusted for certain items.

Financial results by segment are as follows:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2026		2025		2026		2025
Net sales
Engineered Systems	$	194,257	$	143,692	$	518,466	$	392,585
Thermal Solutions		148,463		-		198,069		-
Industrial Process Solutions		61,708		53,907		178,773		167,102
Total net sales	$	404,428	$	197,599	$	895,308	$	559,687


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2026		2025		2026		2025
Segment profit
Engineered Systems	$	50,046	$	29,828	$	115,868	$	79,300
Thermal Solutions		7,137		-		8,649		-
Industrial Process Solutions		9,386		6,101		24,743		88,147

Engineered Systems Segment

Our Engineered Systems segment net sales increased $50.6 million to $194.3 million for the three months ended September 30, 2026 compared with $143.7 million for the three months ended September 30, 2025, inclusive of organic growth of 34%. The increase is led by backlog execution on large scale natural gas power generation projects.

Our Engineered Systems segment net sales increased $125.9 million to $518.5 million for the nine months ended September 30, 2026 compared with $392.6 million for the nine months ended September 30, 2025, inclusive of organic growth of 31%. The increase is led by backlog execution on large scale natural gas power generation projects.

Segment profit for the Engineered Systems segment increased $20.2 million to $50.0 million for the three months ended September 30, 2026 compared with $29.8 million for the three months ended September 30, 2025. The increase is attributable to higher gross profit related to increased net sales. Segment profit as a percentage of sales increased to 25.8% in the three months ended September 30, 2026 compared with 20.8% in the three months ended September 30, 2025. The increase is primarily attributed to market demand for natural gas generation infrastructure products.

Segment profit for the Engineered Systems segment increased $36.6 million to $115.9 million for the nine months ended September 30, 2026 compared with $79.3 million for the nine months ended September 30, 2025. The increase is attributable to higher gross profit related to increased net sales. Segment profit as a percentage of sales increased to 22.3% in the nine months ended September 30, 2026 compared with 20.2% in the nine months ended September 30, 2025. The increase is primarily attributed to market demand for natural gas generation infrastructure products.

Our Engineered Systems segment orders booked increased $358.7 million, or 204%, to $534.2 million during the three months ended September 30, 2026 compared with $175.5 million in the three months ended September 30, 2025, inclusive of organic growth of 159%. The increase is primarily attributable to the Company's energy and power technologies. Investments in energy infrastructure and growth in midstream and downstream markets have resulted in increased demand for emissions, acoustics. and separation/filtration products.

Our Engineered Systems segment orders booked increased $1,026.8 million, or 183%, to $1,589.3 million during the nine months ended September 30, 2026 compared with $562.5 million in the nine months ended September 30, 2025, inclusive of organic growth of 146%. The increase is primarily attributable to the Company's energy and power technologies. Investments in energy infrastructure and growth in midstream and downstream markets have resulted in increased demand for emissions, acoustics, and separation/filtration products.

Industrial Process Solutions Segment

Our Industrial Process Solutions segment net sales increased $7.8 million to $61.7 million for the three months ended September 30, 2026 compared with $53.9 million for the three months ended September 30, 2025, inclusive of organic growth of 8%. The increase is primarily attributable to project execution on semiconductor backlog.

Our Industrial Process Solutions segment net sales increased $11.7 million to $178.8 million for the nine months ended September 30, 2026 compared with $167.1 million for the nine months ended September 30, 2025, inclusive of organic growth of 11%. The increase is primarily attributable to project execution on semiconductor backlog partially offset by the divestiture of the Global Pumps Solutions business.

Segment profit for the Industrial Process Solutions segment increased $3.3 million to $9.4 million for the three months ended September 30, 2026 compared with $6.1 million for the three months ended September 30, 2025. The increase is primarily attributable to higher net sales and the absence of a $0.8 million loss on the sale of the Global Pump Solutions business recognized in the prior-year period.

Segment profit for the Industrial Process Solutions segment decreased $63.4 million to $24.7 million for the nine months ended September 30, 2026 compared with $88.1 million for the nine months ended September 30, 2025. The decrease is attributable to the $63.7 million gain on the sale of the Global Pump Solutions business included in segment profit for the nine months ended September 30, 2025. Excluding the effect of the gain, segment profit increased $0.3 million, as higher net sales more than offset the effects of project mix and the divestiture of the higher-margin Global Pump Solutions business.

Our Industrial Process Solutions segment orders booked increased $26.0 million, or 45%, to $83.4 million during the three months ended September 30, 2026 compared with $57.4 million in the three months ended September 30, 2025, inclusive of organic growth of 72%. The increase is primarily attributable to higher demand for the Company's scrubber technologies in semiconductor and international markets.

Our Industrial Process Solutions segment orders booked increased $67.9 million, or 39%, to $240.2 million during the nine months ended September 30, 2026 compared with $172.3 million in the nine months ended September 30, 2025, inclusive of organic growth of 86%. The increase is primarily attributable to the higher demand for the Company's scrubber technologies in semiconductor and international markets.

Thermal Solutions Segment

The Thermal Solutions segment represents the Thermon business, acquired in June 2026. As such, there is no comparative financial information reflected in the Company's previously filed Quarterly Reports on Form 10-Q.

Net sales for the Thermal Solutions segment were $148.5 million and $198.1 million for the three and nine months ended September 30, 2026, respectively. Results for the nine-month period reflect Thermon's operations from the acquisition date through September 30, 2026.

Segment profit for the Thermal Solutions segment was $7.1 million, or 4.8% of sales, for the three months ended September 30, 2026, and $8.6 million, or 4.4% of sales, for the nine months ended September 30, 2026. Segment profit included $16.7 million and $26.2 million, respectively, of additional cost of sales related to the fair value adjustment to inventory acquired in the Thermon acquisition. The adjustment is recognized in cost of sales as the acquired inventory is sold.

Backlog

Backlog (i.e., unfulfilled or remaining performance obligations) represents the sales we expect to recognize for our products and services for which control has not yet transferred to the customer. Backlog increased to $2,193.5 million as of September 30, 2026, from $793.1 million as of December 31, 2025. Thermon contributed $273.3 million to our backlog figure as of September 30, 2026, with the remaining increase primarily attributable to our growing orders. Our customers may have the right to cancel a given order. Historically, cancellations have not been significant. Backlog is adjusted on a quarterly basis for adjustments in foreign currency exchange rates. Substantially all backlog is expected to be delivered within 12 to 24 months. Backlog is not defined by GAAP and our methodology for calculating backlog may not be consistent with methodologies used by other companies.

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements, see Note 2 to the unaudited condensed consolidated financial statements within Item 1 of this Quarterly Report on Form 10-Q.

Liquidity and Capital Resources

When we undertake large jobs, our working capital objective is to make these projects self-funding. We work to achieve this by obtaining customer advanced payments, structuring our contracts with progress billing provisions, when possible, utilizing extended payment terms from material suppliers, and paying sub-contractors after payment from our customers, which is an industry practice. Our investment in working capital is funded by cash flows from operations and by our revolving line of credit under our Credit Facility (as defined below).

At September 30, 2026, the Company had working capital of $217.7 million, compared with $104.4 million at December 31, 2025. The ratio of current assets to current liabilities was 1.29 to 1.00 on September 30, 2026, as compared with a ratio of 1.34 to 1.00 on December 31, 2025.

At September 30, 2026 and December 31, 2025, cash and cash equivalents totaled $72.1 million and $33.1 million, respectively. As of September 30, 2026 and December 31, 2025, $55.4 million and $26.4 million, respectively, of our cash and cash equivalents were held by certain foreign subsidiaries, as well as being denominated in foreign currencies.

Debt consisted of the following:


(in thousands)	September 30, 2026			December 31, 2025
Outstanding borrowings under Credit Facility (defined below)
Revolving credit facility	$	371,500		$	208,600
Term loan		232,063			—
Total outstanding borrowings under the Credit Facility		603,563			208,600
Outstanding borrowings under the joint venture term debt		4,249			5,647
Unamortized debt discount		(8,492	)		(1,809	)
Total outstanding borrowings		599,320			212,438
Less: current portion		(15,999	)		(1,879	)
Total debt, less current portion	$	583,321		$	210,559

Credit Facility

The Company’s outstanding borrowings in the United States consist of a senior secured revolver loan with sub-facilities for letters of credit, swing-line loans and multi-currency loans (collectively, the “Credit Facility”). As of September 30, 2026 and December 31, 2025, the Company was in compliance with all related financial and other restrictive covenants under the Credit Facility.

On January 30, 2026, the Company entered into the Fourth Amended and Restated Credit Agreement, which provided for a senior secured revolving credit facility in an initial aggregate principal amount of up to $700.0 million. On March 30, 2026, the Company entered into Amendment No. 1 to Fourth Amended and Restated Credit Agreement, which provides for a senior secured revolving credit facility in an initial aggregate principal amount of up to $740.0 million, and added an incremental senior secured delayed-draw term loan commitment in an initial aggregate principal amount of $235 million (the “Incremental Term A-1 Loan Facility”), subject only to the satisfaction or waiver of the related conditions precedent set forth in the Credit Agreement. On June 1, 2026, the Company borrowed $235.0 million on the Incremental Term A-1 Loan Facility.

See Note 8 to the unaudited condensed consolidated financial statements within Item 1 of this Quarterly Report on Form 10-Q for further information on the Company’s debt facilities.

Total unused credit availability under our existing Credit Facility is as follows:


(in millions)	September 30, 2026			December 31, 2025
Credit Facility, revolving loans	$	740.0		$	400.0
Draw down		(371.5	)		(208.6	)
Letters of credit open		(24.2	)		(23.8	)
Total unused credit availability	$	344.3		$	167.6
Amount available based on borrowing limitations	$	344.3		$	123.6

The Company's available secured borrowing capacity under the Credit Facility is defined as the lower of (a) the Credit Facility amount less outstanding borrowings and Letters of Credit on the Credit Facility, and (b) the Company's trailing twelve month EBITDA, as defined in the Credit Agreement, by a factor of the maximum leverage ratio, less outstanding borrowings on the Credit Facility.

Overview of Cash Flows and Liquidity


	Nine months ended September 30,
(in thousands)	2026			2025
Net cash provided by (used in) operating activities	$	121,397		$	(4,100	)
Net cash (used in) provided by investing activities		(450,834	)		1,520
Net cash provided by (used in) financing activities		372,634			(2,834	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(2,728	)		86
Net increase in cash, cash equivalents and restricted cash	$	40,469		$	(5,328	)

Operating Activities


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	CECO	Texas Stock Exchange LLC


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐


Part I –	Financial Information	2

	Item 1. Financial Statements (unaudited)	2

	Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025	2

	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2026 and 2025	3

	Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2026 and 2025	4

	Condensed Consolidated Statements of Shareholders’ Equity for the nine months ended September 30, 2026 and 2025	5

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2026 and 2025	7

	Notes to Condensed Consolidated Financial Statements	8

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

	Item 3. Quantitative and Qualitative Disclosures about Market Risk	34

	Item 4. Controls and Procedures	35

Part II –	Other Information	37

	Item 1. Legal Proceedings	37

	Item 1A. Risk Factors	37

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	37

	Item 3. Defaults Upon Senior Securities	37

	Item 4. Mine Safety Disclosures	37

	Item 5. Other Information	37

	Item 6. Exhibits	38

Signatures		39


31.1		Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer

31.2		Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer

32.1		Certification of Chief Executive Officer (18 U.S.C. Section 1350)

32.2		Certification of Chief Financial Officer (18 U.S.C. Section 1350)

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document with Embedded Linkbase Documents

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


CECO Environmental Corp.

By:	/s/ Kiril Kovachev
	Kiril Kovachev
	Chief Accounting Officer (principal accounting officer and duly authorized officer)


☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934