CECO earnings call analysis

NASDAQ:CECO Q4 2025 Earnings Call Transcript Generated on 6/6/2026 Tanya | Conference Operator: Good day and thank you for standing by. Welcome to the SECO Environmental Corp Q4 2025 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Marcio Pinto. Please go ahead. Marcio Pinto | President: Thank you, Tanya, and thank you for joining us on the CEQA Environmental Fourth Quarter 2025 Earnings Call. On the call with me today is Todd Gleason, Chief Executive Officer, and Peter Johansen, Chief Financial Officer. In today's call, we are covering SECO environmental fourth quarter earnings results, as well as a transaction that will combine SECO with Thermon, a publicly traded global leader, an end-to-end solution provider to process heat, temperature management, and asset protection with strong aftermarket presence. As a reminder, this quarter's webcast, earnings release, and presentation, which include relevant disclosures and non-gap reconciliations, are available on our website. Today's discussion includes forward-looking statements that are subject to risks and uncertainties, including the ones described in our SEC filings, as we have also noted in our presentation legal disclosures. As always, we will leave time at the end of the call for analyst questions. And with that, I'll turn the call over to Todd. Todd Gleason | Chief Executive Officer: Thanks, Marcio, and welcome, everyone. It is a pleasure to speak about two highlights today. We delivered strong, quarter and year and full year results with many financial records. Importantly, we are also announcing a transformational transaction between SECO and Thermon. Please turn to slide number four and let's discuss each at a high level. On the left side of the slide, we outline the SECO-Thermon transaction. This is truly a combination of two proud and winning organizations. Each company is clicking on so many of the right cylinders. Together, we expect the union will create an even stronger global leader with enhanced financial agility and expanded strategic capabilities. When we close the transaction, we will continue to trade as Seco Environmental, and I am excited and very much looking forward to leading the future combined company and working closely with the outstanding leadership and employees at Thermon. More on this transaction in just a minute. Now, turning to the right side of the slide, we delivered another strong quarter for Seco Environmental with full-year results for revenue and adjusted EBITDA largely in line with our final expectations. And we are raising our full-year 2026 guidance, not inclusive of Thurmond, as we have tremendous visibility given our record backlog and growing sales pipeline. Now, please turn to slide number six. Six, and let's review the financials in a little more detail. This executive summary slide captures the main points from today's financial earnings release. Q4 delivered numerous new records. Our backlog is the highest level ever, approaching $800 million and up almost 50% year over year. Revenue growth of 35% and adjusted EBITDA growth of 57% speak to our high performance results. In the quarter, we booked our largest ever project, valued at approximately $135 million for a large-scale natural gas power generation facility based in Texas. For the full year, 2025 orders surpassed $1 billion for the first time, which we signal we would likely accomplish in our December 15, 2025 press release. And as we shared in today's press release, we are raising our 2026 full-year guidance to reflect our tremendous visibility and backlog and that record sales pipeline I just mentioned. Our increased 2026 guidance reflects strong full-year orders growth as well as year-long excuse me, as well as full-year revenue outlook of between $925 to $975 million, which is up from our previous outlook of $850 to $950 million. Our full-year 2026 adjusted EBITDA outlook is now between $115 million to $135 million. So again, we feel we are clicking on many of the right cylinders. Now, before I hand it over to Peter, let's move to slide number seven. We continue to enjoy a strong market backdrop in the power generation, industrial reshoring, industrial water, and natural gas infrastructure customer segments. In each of the past five quarters, we have booked orders and critical infrastructure projects to support domestic power generation and energy delivery investments, and our pipeline indicates we have the opportunity to maintain that pace in 2026. In fact, we have already secured two large natural gas power generation orders exceeding $175 million in aggregate value at this point in Q1. And we have numerous similarly sized and larger opportunities in our pipeline. We remain bullish on the industrial water and wastewater treatment sector, and in particular, the international water infrastructure projects, where we now have our most active and largest pipeline of opportunities associated with water reuse and recycling applications. Industrial air will continue to benefit from industrial reshoring programs, semiconductor investments, and our international expansion activities. As the slide shows, quarter to date to February 24th, which is today, We have booked a little over $270 million in orders, so we are well on pace for another record quarter and obviously a great start to 2026. I will now hand it over to Peter, who will go into more detail on our financial results. Peter. Peter Johansen | Chief Financial Officer: Thank you, Todd. Good day, everyone. Thank you for joining Todd and myself for SECO's fourth quarter 2025 earnings call. Please turn to slide number eight. SECO finished 2025 with very strong results for both the fourth quarter and full year on all our key metrics. We finished the fourth quarter with a record backlog of $793 million, up 47% versus prior year and 10% sequentially. Backlog has increased in eight straight quarters and surged upwards in the most recent five, each with well over $200 million in bookings, highlighted by nice wins in power generation, LNG, midstream gas transport and treatment, global semiconductor, and international water end markets. Fourth quarter orders were $329 million, a company record increase of 50% over the prior year period, with a book-to-bill of approximately 1.5 times. On a full year basis, bookings reached $1.064 billion, a 60% increase over full year 2024 levels with a book to bill of nearly 1.4 times. The results were largely due to strong demand in our power generation, natural gas infrastructure, semiconductor, and industrial water applications. And we had strength globally in all our major operating regions. Revenue in the fourth quarter and full year was $215 million and $774 million, respectively, with both results being company records. On a full year basis, revenue was up 39%, of which 25% of this growth was organic. This result was outstanding. when you consider that we overcame $25 million of revenue headwinds related to the sale of our global pump solutions business in late Q1 of 2025. Our second half revenue was higher than 2024 by 40% as the conversion to revenue of our power generation projects booked in late 2024 and 2025 gained speed. Adjusted EBITDA in the quarter was $29.8 million, an increase of 57% versus the prior year period with margins of 13.9%, representing a 180 basis point improvement over the prior year. For the full year, adjusted EBITDA grew 44% to exceed $90 million for the first time in company history. with 40 basis points of margin expansion. A large part of the improvement was due to lower G&A expense rate, partially offset by $800,000 of costs for strategic reductions in our legal entities to support our accelerating ERP migration program and to conclude certain integration steps from the acquisitions completed in 2024. Let's turn to page nine for now, please. On this chart, I want to remind you that we are presenting SECO's gross profit and our gross margin performance by quarter on a TTM basis to normalize for quarter-to-quarter fluctuations. We have started this chart at the point in which SECO's operating excellence initiative was launched in the fourth quarter of 2022, and you can see substantial improvement and steady performance in the 35% gross profit margin range. In the quarter, we realized a rebound in margins from the third quarter, back above the 35% target level as strong short cycle volumes and project execution and closeouts provided margin uplift. This sequential improvement was approximately 240 basis points and is a typical recovery from third quarter seasonal headwinds. As we look forward to 2026, We will deepen our focus on sourcing and productivity, remain focused on managing price and cost as we navigate an uncertain economic backdrop, and start to realize the benefits from our initial wave of 80-20 deployments, a multi-year journey on which we have embarked that we expect will deliver significant business cost and performance benefits. I will now move a little faster through the next few slides so we have ample time to spend on this morning's announcement and leave time for Q&A. Moving to slide 10. Regarding cash flow, 2025 was truly a tale of two halves, with the first half of 2025 consuming approximately $20 million of cash and the second half delivering approximately $30 million of cash. for a full year cash flow that was positive of approximately 10 million, up 30% year over year. Our cash conversion in the second half of the year was very good at 52% and within our target range for cash flow conversion. And we expect to remain there in 2026. Gross debt and net debt both ended the year at levels lower than where we started the year, with our leverage ratio now at a very comfortable 2.2 times and with liquidity well up at $124 million. With the benefits from the reduction in leverage and the growth of TTM EBITDA and improved pricing in our recently concluded and upsized revolver credit facility, we expect to realize a 50 basis point step down in interest rates following a 25 basis point step down realized in the fourth quarter. This will represent an additional annualized interest expense savings of approximately $1.1 million if we maintain the current gross debt balance. I will now move to slides 11 and 12 and move through them quickly to save some time. On slide 11, the book to bill in the quarter of approximately 1.5 times on record orders. while delivering record revenues, was a high. It is this sustained strong orders performance, resulting in record year-end backlog, combined with our $6.5 billion opportunity pipeline that underpins our 20% plus top line growth in 2026. If we move now to slide 12, we have increased our outlook for all four key metrics, with revenue growth of 23% at the midpoint of our outlook and adjusted EBITDA growth of 38% at the midpoint of our outlook. As Todd stated earlier, we have tremendous visibility given our record backlog and bookings momentum, as well as our sales pipeline, which I've stated now exceeds $6.5 billion and is converting quickly. That concludes the earnings presentation portion of our prepared remarks this morning. And now I turn the mic back over to Todd, who will lead us through the materials describing the exciting strategic combination of SECO Environmental and Thermon. Todd Gleason | Chief Executive Officer: Thanks, Peter. Now let's transition to review a historic transaction for SECO and a major step forward in our industrial leadership journey. Please turn now to slide 14. The addition of Thermon will meaningfully extend Seco's leadership in industrial, environmental, and thermal solutions by adding Thermon's established position in process heating, heat tracing, and temperature management, creating a world-class industrial solutions platform. This combination brings together two highly complementary businesses, creating opportunities to accelerate growth through expanded customer relationships and global reach. And Bruce and I couldn't feel... better about what lies ahead for the combined company and our respective teams. I can't wait to meet many more Thermon leaders and employees. Moving to slide 15, let's review the key terms of the transaction. Under the agreement, which has been unanimously approved by the boards of both companies, the transaction will be executed through a stock and cash merger with a total consideration of approximately $2.2 billion. Thermon shareholders will receive $10 in cash and 0.684 of SECO common stock per share, delivering a substantial premium while allowing Thermon shareholders to participate in the upside of the combined company. The cash component will be funded through existing credit facilities. This leads us to an implied value of approximately 17 times adjusted EBITDA or 13 times including synergies. Upon close, which is expected to occur in mid-2026, Seco shareholders will own approximately 62.5% of the combined company, and Thurmond shareholders will own approximately 37.5%. From a leadership perspective, I will continue as CEO of the combined company, and Thurmond will appoint two board members to serve as directors for the combined company. Each company leadership team will remain in place through the pre-closing process, and I look forward to meeting Thermon leaders and operating teams as we evaluate the most effective and efficient combined company model. On the right, you can also note the key pro forma financials for the combined organizations. With revenues of approximately $1.5 billion, adjusted EBITDA of $295 million, assuming approximately $40 million of run rate synergies. yielding margins close to the low 20s from a balance sheet standpoint the company is expected to have a strong balance sheet with proforma net leverage of 2.5 times giving us ample opportunity to continue to invest in our people processes markets and best growth opportunities now please move to slide number 16 entitled thermon group at a glance There is certainly more to see here than a mere glance. Thermon is a leading end-to-end solution provider of process heating, temperature management, and asset protection with a strong aftermarket presence. For the current fiscal year, they are delivering over $520 million in revenue with approximately 85% of their sales considered OpEx, or what Seco commonly refers to as shorter cycle sales. Thurmond's gross profit margin of 45% reflects their leading products, their great operating and price disciplines, and that shorter cycle product mix. Thurmond currently has adjusted EBITDA margins of approximately 23%. To be helpful, we provide additional revenue analytics at the bottom of the slide, but I will not go through that here. Moving to Page 17 for a quick look at Thermon's expansive solution set. Thermon is a leading diversified industrial leader, undeniable. Similar to Seco, they deliver advanced engineered solutions to solve mission-critical environmental challenges. We couldn't be more excited to learn more about their innovations and strategic growth programs. Each company protects people, protects the environment, and protects industrial equipment. It's an outstanding match. The current high-level segmentation of Thermon sales span from heat tracing, which represent approximately half of the company's revenue, heating systems that represent approximately 35% of revenue, and the balance of approximately 15% in transport, heating, tubing, and digital solutions. Thermon has announced several important innovative solutions, including great momentum they are enjoying with their Genesis controls and newly launched liquid low bank offering, to name just a few. Much to be proud of at Thermon, and we aim to support that pride and strategic growth going forward. Now let's transition to slide 18. We are creating a global industrial leader in delivering mission-critical environmental and thermal solutions. We see this combination as a powerful strategic fit that significantly advances our position as a premier engineered solutions provider. This transaction will meaningfully extend Seco's leadership in industrial, environmental, and thermal solutions by adding Thermon's established position in the aforementioned process heating, heat tracing, and temperature management. Once again, we expect to create a world-class integrated industrial platform. We will have a vast install base by bringing together our more than 75 years of combined installation and product deliveries, which will generate substantial high margin recurring and replacement revenue. Let me tell you more about why this combination wins, which is outlined on slide number 19. Together, we have an expanded addressable market of over $30 billion across attractive, and high-growing industrial end markets. Both companies are well aligned to secular growth tailwinds across electrification, energy transition, data centers, water megatrends. And Thermon operates a recurring short cycle business model which balances well with Seco's project-based longer cycle work. From a financial standpoint, this deal is very attractive. Even before synergies, The combination is accretive in year one. With our identified annualized synergies of approximately $40 million by year three, this transaction creates even more shareholder value. We expect to drive strong double-digit growth and margin enhancements through our productivity and 80-20 programs while achieving these synergies. So we believe the next few years will show an even more powerful value creation company. A cornerstone of our transaction discussions has also been our similar values, cultures, and operating styles. Throughout the transaction process, we've gotten to know the Thermon team, and it is clear they have an outstanding group of employees who share many of our same values. We both have a business and culture grounded in disciplined execution and innovative thinking, and I believe that alignment will serve us well for many years to come and support a smooth integration process. In a nutshell, this is a powerful combination that we believe checks all the boxes. Two winning Texas headquartered companies, two great operating organizations with shared values and commitment to delivering for our industrial customers. And I believe one plus one will equal more than two when everything is said and done. Moving to slide number 20 for a view of SECO's pro forma financials and a little more color on synergies. The pro forma numbers tell a powerful story. When we add the $40 million in synergies, the pro forma is even stronger. Combined, $1.5 billion in sales, almost $300 million in adjusted EBITDA, with close to 20% EBITDA margins, scale, margins, and industrial leadership. And while we have months of pre-integration work ahead, the $40 million in identified synergies is a meaningful enhancement to this already accretive transaction. Now, these identified synergies come in two main buckets. First, the costs associated with combining two public companies and reducing the redundancies, as well as SG&A overlap and additional efficiency savings. And the second bucket in the identified synergies comes from operational efficiencies, footprint rationalization, and supply chain leverage. We do show a third bucket. Our current model does not yet have commercial synergies assumed, but it is an opportunity and we will be pursuing those as we start working together. Okay, last couple of slides before Q&A. On page 21, we have an overview of our global presence. The combined company will have operations in more than 15 countries with a combination of engineering and manufacturing sites that better serve our global customers. Our global population will exceed 3000 employees, many of which are highly skilled engineers, technical resources and thought leaders in their respective markets. Combined, we have the scale and capabilities to deliver the mission critical environmental and thermal solutions across the globe and solve our customers most challenging environmental issues. Moving to page number 22, I'm not going to spend a lot of time on this slide, but you can clearly see the different yet complementary financial profiles of both companies. SECO, as you may know and I've already mentioned, has about 70 to 80% of our revenues from mid to longer cycle projects and the balance of our sales driven by shorter cycle product offerings. Thermon, on the other hand, has a relatively small percentage of revenue from longer cycle projects, but a significant percent from shorter cycle sales. As you can see on the right-hand side of this slide, the combination represents a very balanced company from a revenue cycle standpoint. This is a very attractive mix for any CEO and management team. The right blend of longer cycle jobs and backlog which provided nice visibility to what's already been booked, as well as a steady diet of shorter cycle sales, helping to drive productivity, steady margins, and enhanced cash flows. Now let's pivot to slide number 23. I'm very proud of the progress we have made at Seco over the past five years. I've had the luxury and will continue to have the luxury to lead one of the great high-performance industrial companies, and our results speak for themselves. Since 2022, our growth and margin expansion has been steady and it has been impressive. We have also successfully introduced and maintained a programmatic M&A program to add key businesses and brands to our leading niche industrial portfolio. Since 2022, we have acquired over a dozen companies of various sizes to enhance performance and adjacent market expansion. This proven track record has yielded strong shareholder value creation. We aim to maintain this model of performance and value creation. The combination with Thurmond, we believe, will enhance each. Now, in conclusion on slide 24, I'll wrap up with this before we take your questions. SECO's performance over the past three to five years has been very strong. SECO's performance in 2025 was very strong. Our outlook for 26? also points to very strong performance. Separately, Thermon's results and outlook are also very strong. Today's announcement, the opportunity to combine SECO with Thermon, will make us both stronger. Stronger and more resilient growth, stronger financial profile and scale with agility. A powerful value creation in year one and beyond. I'd now like to open it up for questions and thank you for your interest. Tanya | Conference Operator: Certainly. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. In the interest of time, please limit yourself to one question and a follow-up. Please rejoin the queue for additional questions. Please stand by while we compile our Q&A roster. Our first question will be coming from the line of Aaron Spachala of Craig Halem Capital Group. Your line is open, Aaron. Aaron Spachala | Analyst, Craig-Hallum Capital Group: Yeah, good morning, Todd and Peter. Thanks for taking the questions. You know, maybe first for me, you know, you kind of talked about industrial water, just the most active and kind of largest pipeline that you've had there. Can you just kind of maybe frame that for us, you know, what that business is today and just, you know, some of the timelines and sizes and kind of what that opportunity looks like for you in the next couple of years? Todd Gleason | Chief Executive Officer: Yeah, thanks, Aaron. I'll start and then I'll hand it over to Peter to add some additional commentary. So we've been intentional about organically as well as inorganically building what we believe is proving to be a very attractive industrial water aspect of Seco Environmental. Over the past few years, we've continued to enter into some new markets, both in the United States as well as internationally. And what we're seeing in our position and in these investments is is a large pipeline of activity now for us in 2026 with respect to industrial water treatment and produced water, especially in some international locations associated with energy and heavy industry. So, you know, as we now look at Both in early in this year and throughout the year, opportunities could be between $10 to $50 million in size. We expect to be announcing throughout the year, maybe even each quarter, some pretty exciting produced water treatment opportunities in, let's say, the Middle East. you know, other parts of the world with respect to water treatment for industrial applications. You know, the acquisitions we've made have been helpful, but I also believe that our engineering capabilities and our relationships with our customers, they've been asking us to help them solve some of these critical areas for a number of years. Aaron Spachala | Analyst, Craig-Hallum Capital Group: Understood. Thanks for that. And then, you know, on the Thermon acquisition, You know, I appreciate, you know, not kind of no commercial synergies outlined kind of yet, but, you know, it seems pretty complimentary from a product and end market standpoint. But can you just maybe give, you know, a little bit of detail on where you kind of see some of the, you know, low hanging fruit as you kind of, you know, go to market with just a much broader kind of product set, you know, any kind of customer overlap, you know, any other details you can provide there would be helpful. Thanks. Todd Gleason | Chief Executive Officer: Yeah, no, thanks, Aaron. And we know you know the companies well, you know, since you obviously cover both Seco and Thermon, so we're happy to talk more about this as we go forward. Low-hanging fruit exists. Not only have we known Thermon for a long time as a leader and what they do and certainly their reach and their capabilities, but we have a lot of customers in common. The customers within the customers might be a little different. So, if you're looking across energy or industrial organizations, we share a lot of customers, which means we can solve a lot of problems separately or together. We have a variety of overlap in certain projects where we can see very advanced thermal applications being a part of what could be a combined bid in the future. And certainly they have relationships that we don't in geographies or in end markets, and we have relationships that they don't. And we have found that that to be a powerful growth component in our previous acquisitions where we can introduce a new product or solution offering across a range of geographies or adjacent markets. So it will be an exciting aspect of this combination. And then, look, I'll just say last but not least, and there's many more things I could talk about, But I'll go right to their Genesys controls platform and solution set because, you know, we, in our early dialogue, we certainly see that as a, you know, as a complementary opportunity for us to learn more and to evaluate ways to bring advanced controls and monitoring across more of our portfolio. So that is definitely a low-hanging fruit conversation for us to have, and we'll evaluate that going forward. Aaron Spachala | Analyst, Craig-Hallum Capital Group: Yeah, definitely exciting. Thanks for taking the questions. I'll turn it over. Thanks, Aaron. Tanya | Conference Operator: And our next question will be coming from Rob Brown of Lake Street Capital Markets. Your line is open. Rob Brown | Analyst, Lake Street Capital Markets: Hi, good morning. Congratulations on all the progress. Tanya | Conference Operator: Hey, Rob. Rob Brown | Analyst, Lake Street Capital Markets: Just following up a little bit more on Thermon, the short cycle business, could you sort of clarify how that business works? What's the sort of installed base that you expect and how recurring is that business? Todd Gleason | Chief Executive Officer: Well, they have 75 years of installed base, right? So, you know, this is an organization that has long proven their high quality, long proven their ability to deliver for their customers every day around the world in some of the harshest operating environments. They, like Seco, are very proud of the durability and the long-lasting aspect of their product and solution set. So, you know, but at the end of the day, their customers rely on them to help them expand or as they build out their infrastructure or as they replace their infrastructure. So, you know, it's a – you know, their install base is in the billions. They enjoy – you know, thousands of invoices probably a month as their average sale is much smaller than ours. So they're constantly providing updated, you know, product for their customers and their markets while they're also working with new customers to solve their complex thermal needs and other areas. And, you know, with their launch of Liquid Load Bank and some of their other new product categories, I think they're very excited, and so are we, that they have a very strong, not just replacement cycle in front of them, but a penetration in some new market categories that their investments are going to yield outstanding results. Unknown | Participant: Okay. Todd Gleason | Chief Executive Officer: I would also point to you, Rob, that Thermon has, and we didn't include, you know, we wanted to limit the number of slides, but they have some very, I think, good material on their investor presentations, including one from late 2025, where they really show sort of how they break down their segmentation of their revenues. So for our analysts or for our shareholders not only will we be showing more combined materials going forward but i would point you to their website and on their investor relations uh section they have some very some very good materials for you okay Rob Brown | Analyst, Lake Street Capital Markets: Great, thank you. And then to the basic eco-business, the order pipeline, you noted, continued very strong into the year here with a couple power projects. But what's sort of the pipeline activity, I guess, specifically in the power vertical? You know, at this point, do you have sort of multiples of these or just characterize the pipeline of the power market at this point? Todd Gleason | Chief Executive Officer: Yeah, Peter certainly has a ton of depth on this as we continue to do operating reviews with our businesses. And let's just say that, you know, the current power segmentation of our pipeline is well in excess of a billion dollars. You know, we're in regular dialogue with the most important end customers and in the power generation space. I believe and we've been saying for quite a number of quarters that SECO is really well positioned for these large gas, natural gas turbine power jobs that are now coming down the pipeline that really require our advanced solutions. And so, look, we would signal that late last year and already early this year, we're starting to see even more of these larger opportunities. We have a lot of visibility in our pipeline. We're in regular dialogue about these projects. You know, it's certainly well in excess of a billion dollars, could even be approaching $2 billion in what we would call a short or medium term pipeline with respect to these power jobs. Peter, I don't know if you want to add more to that. Peter Johansen | Chief Financial Officer: It's, you know, we've become fond of saying, Rob, and you may have picked up on that in past discussions, that it feels like POs are falling from the sky. or occasionally you wake up in the morning and you trip on one. I mean, it's such a dynamic environment that all the behind the meter, in front of the meter, whether providers of power are moving very, very quickly to put solutions in place. But the one thing they all have in common, regardless of the form of generation, is they need emissions treatment. Having an emissions solution And we're one of three companies in the world that could deliver a comprehensive end-to-end solution for emissions management around gas turbines and large gas engine fleets. Having that emissions treatment solution gets you permitted faster. And that has become critical to both the utilities that are going to buy the power or the OEMs are going to deliver it. And so we have that unique position in the ecosystem. Todd mentioned $1 billion to $2 billion is the range of projects we're negotiating, but that's not the total visibility. That's just what we're working on at present. Unknown | Participant: Great. Thanks for all the call-in. Tanya | Conference Operator: And our next question will be coming from Gary Sweeney of Roth Capital. Your line is open. Gary Sweeney | Analyst, Roth Capital: Hey, good morning, Todd, Peter, and Marcio. Thanks for taking my call. Thanks, Jared. Thanks. Obviously, the first question is going to be on Thurman. I wanted to see if you could give a little bit more detail. It sounds as though Thurman is a little bit more short cycle. Obviously, you're long cycle, and that's one of the points you highlighted in your prepared remarks. But how much of this is there an opportunity for maybe wild share on some projects that you're going after versus maybe just access to new customers or new customers within existing customers? Todd Gleason | Chief Executive Officer: Yeah, look, we have a pretty consistent track record, Jerry, in our acquisitions of identifying and combining with companies with great growth profiles. So when we look at any transaction, we're more focused on how we invest in those organizations or how they help us rapidly invest in growth pursuits before we're really looking at synergies. This transaction stands on its own before we even talk about the word synergy. And then when you add the early identified synergies that we talked about in the buckets that we talked about, you start to get an even more powerful financial combination. But back to, I think, the root of your question. Look, we enjoy being – we may be diversified and we enjoy being diversified. We're very focused on continuing to build the, we believe, premier industrial solutions provider with respect to environmental products, services, and and engineered solutions and that's exactly what thermon's doing as well so if there's an opportunity and there certainly will be opportunities for us to look at customers customer relationships markets and um and and growth to go at things together we will do that um we are on very large complex projects where um where heat and thermal management are required, and we don't think of those previously. We'll certainly be thinking about those going forward. We have a need and an interest in advanced controls applications, and we haven't made that investment yet, and Thermon we know has. So how do we look at opportunities to leverage what they've done and where they're located in their markets with their knowledge, and how do we bring that to them as well? Look, our customers, like I said, require rely on Thermon for protective services to ensure that their environment is clean and safe and that their employees are benefiting from the efficiencies of their processes. So do we. So when you both are solving problems for your customers, unique ways, but for a similar reason, then there's just going to be commercial synergies. Gary Sweeney | Analyst, Roth Capital: Got that. Yeah, I mean, I... Was a little bit more curious on, you know, obviously I get, you know, the short cycle's great for you, you know, speeds up cash conversion. Just from a holistic standpoint, I mean, does Thurman, sounds as though Thurman does bring you some opportunities to expand some wild share on projects, and then conversely, there's their large aftermarket exposure that could probably grow with some of your customers that they may not cover as well. Is that a fair sort of, generalization? Todd Gleason | Chief Executive Officer: Yeah, that's a fair generalization. And I think over the next few months, as we start to really now intentionally roll up our sleeves appropriately with Thurmond and evaluate these synergies that we're talking about here, Jerry, I think there's going to be some very exciting ones. Like I said, we've mentioned some of their investments and innovations already. More to come on that. And, you know, look, we have incredibly strong relationships with customers and small, medium, and large projects that we know require thermal applications. And, you know, why wouldn't we make sure that we work together to solve those customer needs? Gary Sweeney | Analyst, Roth Capital: Got it. And it wouldn't be a Q&A if I didn't ask one more question on the power side. Lois turbine makers, manufacturers, they're starting to look at 28. Even 28 may be sold out, starting to look at 29 and 30. When you discuss your pipeline, how far out on the curve are you looking? And this is more of a question of, like, obviously there's a longevity issue or opportunity here. I'm just curious as to when you look and describe your pipeline, how many years out are you looking in regards to that? Todd Gleason | Chief Executive Officer: When we describe our pipeline, when we describe our pipeline of, you know, between $1 billion to $2 billion, those are opportunities that we expect for us. That's our dollar level. We'll book in the next, 12 to 18 months, maybe two years. That doesn't mean there's not overlap that it could extend a little beyond that. So think of it as a two-year pipeline for us. Gotcha. Gary Sweeney | Analyst, Roth Capital: And the pipeline is already expanding beyond that. Peter Johansen | Chief Financial Officer: Jerry, we need the orders in the next 12 months to deliver in 28. And we need them in the next 24 months to meet 29 and 30. So we're aligned with our customers. We do joint planning. We do joint project assessments. Now, they move in and out, customers, timing changes as they solidify their investment, they solidify their permits. But what is clear is the demand is exceeding supply in all categories of equipment, and there's no shortage of consumer for this equipment. So we may reprioritize one project over another based on those dynamics. but ultimately it comes down to how much capacity do we need to have in place to deliver the solutions that are being demanded of us across thermal, acoustic, emissions, and inlet air treatment, and we're in a very good position to supply all that well into the 30s. Gary Sweeney | Analyst, Roth Capital: Got it. That's what I was looking for. Thanks, and congratulations on the announcement. Peter Johansen | Chief Financial Officer: Thank you, Jerry. Tanya | Conference Operator: And our next question will be coming from Jim Richuity of Needham & Company. Your line is open, Jim. Jim Richuity | Analyst, Needham & Company: Hey, just on the full year revenue guidance for the base SECO business, any thoughts on the revenue distribution as you go through the year, first half versus second half, just given the backlog, the timing of some of this? Todd Gleason | Chief Executive Officer: Yeah, look, thanks, Jim. We'll, you know, we, as you know, we don't break down our quarters in terms of guidance, but, you know, we have a profile that is typical, you know, when we think about our years in terms of the weighting of, you know, when projects are at their peak and when projects are not at their peak. So, you know, there's a part of me that wants to just sort of indicate that, you know, Q1 is typically, you know, a, you know, Q1 is usually one of our smaller quarters, and then Q2 really ramps up from there. I think you just probably similarly weighted to some previous years you're going to see. I'm not suggesting it's 55% or 60% in the second half of the year, but it's certainly going to be more in the second half. Q4 is almost always our largest quarter. You know, it's Q4 in a fiscal calendar year. So, look, I think you're going to see slightly more in the second half our pipeline. Some of these larger jobs that we've booked start turning into revenue in the second half, not in the first half. And it gives us confidence, though, that we know what these schedules are. As Peter mentioned, one thing on these power-related projects is there's not a lot of wiggle room here for – calendar moves. These are jobs that are happening, that are funded, that are pre-funded, and that are required to meet certain deadlines. So we probably have the tightest backlog that we've had in maybe ever with respect to timing. I'd say it's slightly more in the second half than the first half for sure. We'll think about how we can be more clear on what that breakdown really looks like, but I'd go with at least 55% in the second half. Jim Richuity | Analyst, Needham & Company: Thanks. And just on Thurmond, Todd, you characterized them as being a leader in their markets. I'm just wondering if you could give us any color on the competitive landscape or their market share position in their, you know, as it relates to some of the larger markets that they address. Todd Gleason | Chief Executive Officer: Yeah, I think we'll hold off on market share, but they're certainly a leader. We know the space. You work in the industrial arena like we have for just a few years, like 30, and you know who's strong and where they're strong and why they're strong and why you see their names when you walk indoor or outdoor on heavy industrial manufacturing facilities. So, you know, no doubt that they compete with a variety of smaller private companies when it comes to some of their specific market categories or product categories or solution categories. They also compete with large privately owned organizations that, you know, that are in that heat tracing space for quite a while. There has been some consolidation here, but Thermon, in their many, many decades of leadership, has continued to be a top two or three player in their key markets. Now they're introducing some new products, and we're excited to continue those investments as they move into some adjacent spaces where that share is growing. sort of emerging because these are new categories. And so, but look, you're looking similar to Seco and our brands. We believe that we're a top two or three player in many of our niche markets. Thermon clearly reflects that. Jim Richuity | Analyst, Needham & Company: Okay. Did you say what the organic growth rate was in Q4? I may have missed it. I think you gave it for the year. Todd Gleason | Chief Executive Officer: Sorry, what was the question, Jim? Apologize. Jim Richuity | Analyst, Needham & Company: Yeah, I apologize. The organic growth rate in the quarter, I think, and you said it for the year, I may have missed it. What was the organic growth rate? Todd Gleason | Chief Executive Officer: It's about a little over 25% in the quarter. It might be as accurate as 26%, but I just know it's a little over 25% in the quarter, organically. Congrats. Thank you. Thank you, Jim. Tanya | Conference Operator: And our next question. We'll be coming from the line of Bobby Brooks of Northland Capital Markets. Your line is open, Bobby. Bobby Brooks | Analyst, Northland Capital Markets: Good morning, Dan. Thank you for taking my question. I wanted to ask and hear a little bit more on Thurman's end market splits and how similar that is to you. And also curious, are there end markets as flexible as yours where it can kind of consistently change to where the puck is going? I'm guessing maybe not as much since it's more short cycle focused. But just wanted to hear more on that and maybe along those lines, what markets do you feel at this early stage have the best opportunity for cross-selling? Peter Johansen | Chief Financial Officer: I'll take the high-level distribution of their revenue is one of the charts at the end of the deck. You'll see there's some complementary but also some distinct differences. While cross-selling might be interesting, It is not the fundamental driver of value creation in this opportunity. The end markets that they serve today, and Todd mentioned it earlier, are very similar to ours, with the exception of they have a rather substantial rail and transit opportunity that we don't touch, and they've got some unique capabilities that sit inside of renewables in terms of keeping windmills frost-free, keeping solar panels from fogging due to condensation and other things that are quite interesting and will continue to grow. The mix is very complementary in that they can move, and their technology is adaptive, both in heating as well as heat tracing, to wherever you have a temperature management or thermal control issue. And it doesn't necessarily mean it's cold out. It can be that the process requires a warm fluid to be passed or a dry gas to be moved. Or the application diversity is immense. And that gives us great confidence that our mix of project and short cycle will continue to deliver resilient revenue growth. The other one dimension I think you need to consider, Bobby, is that they are typically specified and installed late in a project, and we are typically specified and procured early in a project. So we'll now get to touch clients along a much longer period in the buying window and explore new opportunities. Todd Gleason | Chief Executive Officer: Bobby, so I'm just going to add a couple quick things here. I've been aware, and it just touches on some of the previous questions of Thermon for decades. Part of the reason is at a previous organization that I worked, we had a business at the time that was also in the space. well positioned in this space. And at the time, I had, and most people had a view, that this was highly leveraged or positioned with large and important markets, but in cyclical spaces around oil and gas, specifically places like the oil sands in Canada. And that cyclicality was somewhat limiting. Hats off to Bruce and and the leadership team and the organization at Thermon because intentionally and successfully, similar to what we've done at SECO over the last not just five years but 10 years, they have been diversifying into general industrial, diversifying into new end markets geographically, introducing new innovations. and offsetting some of those cyclical markets by growing into new markets. Their diversification is a result of a focused and capable expansion into those new markets. So when you look at them today, you know, 30% comes from oil and gas, let's say. But if you went back 10 or 15 years, that might have been as high as 75 or 80%. So I would really want to say that they might not have the same opportunities for us in an immediate short term to be quite as nimble and move from industry to industry, but they've certainly proven that over time they have a lot of athleticism to expand into adjacent markets and to become much more balanced. Bobby Brooks | Analyst, Northland Capital Markets: That's super helpful, Collin. I really appreciate that, Todd and Peter. And then the produced water, that's something that I'm very interested in. I don't think enough people appreciate it. the large opportunity there when every barrel of oil in the Permian comes with five to seven barrels of produced water. What I was curious to hear from you guys is when you talk about the opportunity, it seems more internationally focused than domestically. I'm just kind of curious as to why is that, and thank you. Peter Johansen | Chief Financial Officer: Yeah, Bobby, that's an easy one. Our solution set is designed around large fields and fixed process equipment. The Permian and other basins are around mobile equipment. They drill a well, they produce, the well lapses, they move the equipment to the next well pad. It's much more of a gathering process. It's not a fixed installation. At the right time when you're available, we'll show you the photographs of what we're supplying, and you can see you don't want to move it. We're also treating magnitudes of water that are far greater than what comes out of a fracked well. That's the reason. Now, you are right that the Permian does produce a large water cut and it's growing, but there are very good suppliers that cover that already. Unknown | Participant: Got it. Really appreciate the call. I'll turn it to you. Bobby Brooks | Analyst, Northland Capital Markets: Thank you. Tanya | Conference Operator: And our next question will be coming from Amit Dayal of H.C. Wainwright. Your line is open, Amit. Amit Dayal | Analyst, H.C. Wainwright: Thank you. Good morning, everyone. So Todd, just on Seco's standalone outlook for 2026, does that include any potential small acquisitions or is that all organic? Todd Gleason | Chief Executive Officer: This is all organic. Our current outlook only reflects our aforementioned backlog pipeline in organic investments. Amit Dayal | Analyst, H.C. Wainwright: Awesome. And then, you know, for the combined company, how should we think about, you know, potential growth rates, you're above 20%, you know, as a standalone entity right now. I mean, could this accelerate even further, you know, as a combined entity on the revenue side? Todd Gleason | Chief Executive Officer: So we have a very good visibility to a medium and longer term here with our pipeline. We'll learn more about Thurmond's pipeline as we go forward. Their growth has been at a very attractive rate in this market. We believe, and certainly from our conversations and our analysis, that They have a rich opportunity set in front of them, not just with their installed base, not just because of their exposure to these growth markets, but because of their great innovations that they've been launching, which opens up an ability for them to have points of growth higher than has been their historic average. We have This incredible super cycle with us right now with power, with natural gas infrastructure, on the industrial air side with what we see as a continuous reshoring activity and some of the larger markets that people are grabbing onto the headlines with respect to semiconductor, those are with us for a while. Those aren't small projects. When we win in semiconductor, we're winning fairly large and longstanding applications and installations and relationships with those customers. I'm bullish. You can tell. We have an outlook for 2026, which is completely organic. which is, again, at the greater than 20% level. We believe that our outlook into the next few years represents a similar opportunity to maintain that very, very strong double-digit growth. Look, Thermon solidifies that. If it doesn't add to the growth rate in terms of the percentages, It adds to the consistency in the business mix that we'll have quarter by quarter. And look, these adjacent markets and the opportunity to work together with innovation is going to be powerful. This is a growth story here. This is an investment. You know, at the risk of sounding like it's hyperbole, we are two companies that are really clicking on a lot of cylinders. And, you know, we have an opportunity, much like we've done with the vast majority of our previous M&A activity, to maximize growth together. And that's what we plan to do with Bruce and the team. Amit Dayal | Analyst, H.C. Wainwright: Thank you, guys. That's all I had. Tanya | Conference Operator: Thank you, Amit. And I would now like to turn the call back to Todd for closing remarks. Todd Gleason | Chief Executive Officer: Thank you. I was anticipating that. Well, thanks everybody for the questions and the interest. To our new friends at Thermon, we can't wait to meet many of you in the coming period. Thanks again to our global teams that are delivering incredible value to our customers as we continue to protect people, protect the environment, and protect our customers' investment in their industrial equipment. We will be participating at some upcoming conferences in March, both Roth and Citadel's small mid-cap industrials conference. So we hope to see you in March at those events or at other opportunities to meet, whether it's in Dallas or on the road. Thanks, everyone. Have a great day, and we'll talk to you soon. Tanya | Conference Operator: And this concludes today's program. Thank you for participating. You may now disconnect. jsPDF 3.0.3 D:20260606090037-00'00'

NASDAQ:CECO Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Tanya | Conference Operator: Good day, and thank you for standing by. Welcome to the Seco Environmental Third Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Marcio Penso, Vice President of Financial Planning and Vector Relations. Please go ahead. Marcio Penso | Vice President of Financial Planning and Investor Relations: Thank you, Tanya, and thank you for joining us on the SECO Environmental Third Quarter 2025 Earnings Call. On the call with me today is Todd Gleason, Chief Executive Officer, and Peter Johansen, Chief Financial Officer. Before we begin, I'd like to note that we have provided a slide presentation which is on our website at SecoEnviro.com. The presentation materials can be accessed through the investor relations section of the website. I'd also like to caution investors regarding forward-looking statements. Any statements made in today's presentation that are not based on historical fact are forward-looking statements. Such statements are based on certain estimates and expectations and are subject to a number of risks and uncertainties. Actual future results may differ materially from those expressed or implied by the forward-looking statements. We encourage you to read the risks described in our SEC filings, including on the Form 10-K for the year ended December 31, 2024. Except to the extent required by applicable securities laws, we undertake no obligation to update or publicly revise any of the forward-looking statements that we make here today. whether as a result of the information, future events, or otherwise. Today's presentation will also include references to certain non-GAAP financial measures. We've provided comparable GAAP and non-GAAP numbers in today's press release and provide non-GAAP reconciliations in the supplemental tables in the back of the slide deck. All right, with that, I'll turn the call over to SECO CEO Todd Gleason. Todd? Todd Gleason | Chief Executive Officer: Thanks, Marcio. And good day, everyone. Thanks for your time and for your continued interest in SECO. I'm very pleased to discuss another strong quarter as well as our reaffirmed outlook for 2025 and our initial view of full year 2026. With that said, please turn to slide number two. This executive summary slide captures the main points we hope you take away from today's earnings call and our release this morning. We will provide much more detail in later slides, so I will be brief. We delivered another high performance quarter with outstanding top line and bottom line growth. We exit Q3 with a new record backlog, even after generating our highest ever quarterly revenue. In the quarter, we expanded EBITDA margin nicely while we continue to invest in long-term growth resources and operating capabilities. Given the tremendous visibility we have in our backlog and sales pipeline, we reaffirm our full-year 2025 outlook and introduce our full-year 2026 outlook, which points to another year with very strong growth in both sales and adjusted EBITDA. As you will hear from this call, we remain very bullish as we are encouraged by strong market dynamics in our most impactful sectors, and pleased that our proven operating model continues to deliver for our customers and for our shareholders. Now let's dive into more details. Please turn to slide number three. Demand for SECO solutions and services continues at a record-setting pace. Our backlog grew to $720 million, a new record. Year over year, our backlog is up approximately $280 million, or 64%. Sequentially, our backlog increased by approximately $30 million. This new record backlog was made possible by another quarter of robust order intake of $233 million in new bookings, which is up 44% versus Q3 of 2024. We continue to book a nice mix of mid-sized and large-sized orders, particularly in the power generation and energy transition sectors. While we didn't book any mega jobs this quarter, because of timing of those particular jobs, we are very pleased with how those power opportunities continue to develop. We remain well positioned for these larger projects, which we define as greater than $50 and even greater than $100 million. When combined with orders from the first half, our year-to-date 2025 book-to-bill is nearly $1.3 million, with 735 million dollars in year-to-date orders if you expand the bookings across the past four quarters we have now booked approximately 950 million dollars in new orders with each quarter comfortably above 200 million dollars with the investments we have made to position our businesses to capture and capitalize on robust demand in our core markets we expand into new geographies, and offer more new solutions and services, our sales pipeline is now over $5.8 billion, which adds to our confidence for sustainable growth. Quarterly revenues came very close to eclipsing $200 million for the first time and produced an all-time record of $198 million in the quarter. This was up 46% year over year. Through three quarters of 2025, we have already generated more sales than all of last year, which had been a previous record. When we entered 2025, we forecasted strong growth. And I would submit that our year-to-day bookings and revenues are meeting or exceeding the bullish outlook we originally provided. Adjusted EBITDA was up 62% in the quarter as our sales growth and improving G&A cost profile continues to allow nice EBITDA margin expansion. And Q4 free cash flow of approximately $19 million was in line with the nice cash flow performance we expected and a strong rebound from our first half of 2025. We expect to continue to improve our working capital position as we navigate the balance of the year. A final metric on this summary slide shows adjusted EPS was 26 cents, up approximately 86% year over year. So overall, record results and solid performance. And we enter Q4 with an incredible backlog and sustainable momentum in all of our growth programs. Now please turn to slide number four. As today's press release highlighted, we are reaffirming our full year 2025 annual outlook across the board. This represents full year revenue of between $725 to $775 million, which is up approximately 35% at the midpoint year over year. For adjusted EBITDA, we are maintaining $90 to $100 million, which is up approximately 50% at the midpoint. And free cash flow at around 60% of adjusted EBITDA for the year is also reaffirmed. You can see the comments on the right side of the slide. One of the items we highlight is our expectation that Q4 bookings will be above $250 million, and depending on the timing of just a few orders, we might actually deliver our first $300 million plus quarter. Now, before I hand it over to Peter, let's move to slide number five for a quick overview on SECO's prime position to benefit from current market dynamics and also navigate potential challenges. For the remainder of 25 and our initial 2026 outlook, we have a strong market backdrop in power, electrical equipment, industrial reshoring, industrial water, and natural gas infrastructure sectors. Each of the past four quarters, we have booked orders in the critical infrastructure projects to support domestic power generation and energy delivery investments. And our pipeline would indicate we have the opportunity to maintain that pace throughout 2026. We see these projects continue to grow in both side and volume as we not only head through that year, but into 2027. We remain bullish on the industrial water and wastewater treatment sector, and in particular, the international water infrastructure projects, where we now have our most active and largest pipeline of opportunities associated with water reuse and recycling applications. We expect substantial orders to be placed over the next four to six quarters with a sales pipeline that extends also well into 2027. Industrial reshoring and the global semiconductor and electronic component sectors also remain robust, and SECO's breadth of capabilities in industrial air and energy applications ensure that we are very well positioned to continue to win in these areas. We remain extremely focused on optimizing our project pricing and margin levels based on constant communication with our extended supply chain, including our fabricators, component suppliers, and raw material suppliers. We have seen moderate inflation in select commodities and components that we include in our costing models and work to mitigate our designs and sourcing plans. And certainly last but not least, M&A. We have not announced the transaction since we closed the sale of our global pump business in late Q1, as well as the acquisition of Profire Energy in early January of this year. But that doesn't mean we haven't been actively building our M&A pipeline and advancing certain deal-related discussions. We remain focused on the sustainability of Seco's portfolio. building a world-class industrial company with leadership positions in several and meaningful industrial niches. We expect to have more to discuss in the coming quarters. And as far as challenges or uncertainties, at Seco, we believe that proper planning for scenarios is one of the hallmarks of a high-performance company. We remain laser-focused on the things we can control. and we prepare for additional actions if certain headlines turn into headwinds. As such, we continue to monitor tariffs and the impact on inflation. We are also monitoring the U.S. government shutdown and what impact that might have on various operational items. So far, nothing that we can point to as far as moving the needle up or down as it pertains to SECO. We will maintain our focus on these potential factors and act accordingly. Best to be proactive when possible, and that's our plan. I will now hand it over to Peter, who will go into more detail on our financial results. Peter. Peter Johansen | Chief Financial Officer: Thank you, Todd. Good day, everyone. Thank you for joining Todd and myself for SECO's third quarter 2025 earnings call. I would like you to turn to slide number seven for more details on our recent financial results in the quarter. SECO finished the third quarter with a record backlog of $720 million, up 64% versus prior year and 5% on a sequential basis. This result delivers the 11th of the last 12 quarters with an increase in backlog. The increase was driven by good order rates across a wide range of end markets. Of the total, approximately $60 million is related to the recent acquisitions with the balance of the increase being generated from organic order growth. Third quarter orders were $233 million, an increase of 44% over the prior year period, representing a book to bill of approximately 1.2 times. And as Todd mentioned earlier, the fourth consecutive quarter with orders greater than $200 million for a trailing 12-month level of $954 million, 65% greater than the prior 12-month period. This $954 million level represented a book-to-bill of 1.33 times revenue, a record for any 12-month period in SECO company history, by a large margin. and a four-quarter average of approximately $238 million. The results were largely due to strong demand in power, natural gas infrastructure, semiconductor, and industrial water applications. I would like to point out that SECA was just shy of reaching $1 billion in orders on a 12-month basis for the first time in company history. a level that we expect to achieve in the coming 12 months. Revenue in the quarter of $198 million was the highest for any quarter in company history and an increase of 46% or $62 million over prior year. Approximately 30% of the year-over-year increase was generated by the company's most recent three acquisitions, and the balance was from organic growth. Sequential revenue was up 7%, with a big assist by revenues recognized on large power generation projects booked in prior quarters, as well as strong backlog conversion from industrial air, industrial water projects. Adjusted EBITDA of $23.2 million was an increase of 62% versus prior year, with margins improving approximately 120 basis points over the year-ago quarter. On a trailing 12-month basis, adjusted EBITDA grew 26% to approximately 80 million, with margins down slightly, driven by our Q1 2025 results, which were lower than anticipated. On a sequential basis, adjusted EBITDA was flat on a dollar basis with 80 basis points of margin contraction due to lower gross profit margins in the quarter, partially offset by lower G&A spending. Gross profit margins of approximately 33% in the quarter was down 70 basis points year over year, mainly due to an adverse project mix as well as as well as driven by a medium-sized project closeout with dilutive gross margins. Sequentially, gross profit margins are slightly down, driven by mix and the typical summer seasonal headwind dynamics. Sales engineering and G&A expense continued its favorable downward trend with spending in the quarter down 4% sequentially, benefiting from cost-saving initiatives initiated in the first quarter and strong expense management. Adjusted EPS in the quarter was up 12 cents or 86% on higher volumes. Operational excellence efforts and G&A expense management partially offset by higher interest expense. Now please turn to page 8 with me to review our backlog position in more detail. With our strong orders performance in the third quarter, our backlog is continuing its steady upwards climb as we convert on the growing sales opportunity pipeline. At $720 million, SECO's backlog has more than tripled since the end of 2021. We expect the majority of this backlog to convert to revenue within the next 24 months, with a large portion scheduled to convert over the next 18 months. Our 2025 year-to-date book-to-bill is approximately 1.3 times further underpinning future revenue. Now, please turn to page 9 with me for a look at gross profit and gross margin performance. This slide, like in previous earnings decks, presents SECO's gross profit and gross margin performance by quarter since the fourth quarter of 2022. We are presenting it on a trailing 12-month basis to normalize for quarter-to-quarter fluctuations and to provide a look back to the start of SECO's operating excellence agenda deployment, which began in the fourth quarter of 2022. Since that point, SECO has expanded trailing 12-month gross profit margins by approximately 500 basis points, with gross profit dollar growth of slightly greater than 95%. In the third quarter of 2025, our business delivered the second highest gross profit dollar performance for the company in a quarter of $64.6 million and a gross profit margin of 32.7%, with a decrease of 350 basis points sequentially and 70 basis points year over year. Project mix and seasonal dynamics drove the quarter-on-quarter decline. I would like to remind the audience that a sequential step down from second quarters to third quarter is normal for SECO. This has occurred annually since 2020. Most recently in 2024, where we experienced a 220 basis point sequential reduction before a similarly sized step up in the fourth quarter. The seasonal dynamic is mostly due to fewer working days with summer holidays in Europe and the United States, resulting in a general slowdown in business operations. In addition, we chose to accelerate the closeout of an industrial air project with dilutive margins into the third quarter to put that behind us for the balance of the year. Similar to past years, we fully expect gross profit margins to bounce back into the fourth quarter and continue the upwards momentum as we maintain long-term profit margins at the gross margin level at greater than 35%. On a trailing 12-month basis, our gross profit margin was 35% at the end of the third quarter. This improvement over the past two-plus years is attributable to the progress our teams have made capturing annualized sourcing savings in the range of $10 million, improving project execution, and the impact of our commercial and portfolio transformation initiatives to improve the business mix while making acquisitions with accretive gross profit margins. For the remainder of 2025 and into 2026, we will continue to implement and expand on our operating excellence agenda, focusing on project execution and sourcing and increasing our focus on G&A expense optimization and process simplification to further benefit adjusted EBITDA delivery. These efforts will be bolstered by the addition of 80-20 to our operating model, a process which we have introduced late in the third quarter and will continue to drive deeper into the organization in coming periods. Now please move to slide 10. where i'll review cash flow and indebtedness starting on the left side of the page with free cash flow generation this the schedule shows a walk from gap net income to free cash flow on a year-to-date basis cash flow in the quarter was a net positive of 19 19 million dollars a strong improvement of 22 million sequentially versus the second quarter due to strong cash generation from operations, due to higher volumes, improved working capital management, and adjustments related to taxes paid on the gain on sale of the GPS business in the first quarter of this year. On a year-to-date basis, cumulative free cash flow is approximately $1 million. Year-to-date capital expenditures of approximately $8.7 million. are largely driven by investments in our ongoing ERP system migration program, operating improvements in select production facilities, and office updates and consolidations in Dubai, Shanghai, and Singapore, as we integrated our legacy and acquired teams in those respective regions. On the right side of the slide is a summary of SECA's gross indebtedness, with the primary drivers of change shown in the schedule provided. We ended the third quarter with gross debt of approximately $217 million, flat two-year in 2024, and a reduction of approximately $20 million from the end of the second quarter. Cash generated from operations and working capital initiatives was used to reduce our gross debt balance in the quarter to a level that now predates the profile acquisition concluded in early January 2025. The reduction in gross debt combined with the growth of our TTM EBITDA will result in a 25 basis point step down in the fourth quarter for the interest rate we will pay on our outstanding revolver balance, providing CECA with approximately $550,000 of annual savings and interest payments on the current balance. This benefit is exclusive of the benefit we will experience from further Fed rate reductions of which two are expected by the end of 2025. Net debt at quarter end was approximately $186 million, a decrease of $13 million from the end of the second quarter and a slight increase from the year-end net debt balance of $180 million. At $186 million, our net debt to EBITDA leverage ratio has been further improved to approximately 2.3 times our third quarter TTM bank EBITDA of $80.4 million. At the end of the quarter, our investment capacity is $109 million, an increase of $40 million from the year-end 2024 level, and providing sufficient liquidity for our near-term needs. While we remain active in cultivating various M&A opportunities and expanding our deal pipeline, Our short-term focus for capital deployment remains to further strengthen our balance sheet, accelerate our ERP migration efforts, and fund our double-digit organic growth. However, with our current capacity, we are well positioned to close on one of the tuck-in transactions working its way through our M&A pipeline. That concludes my remarks on SECO's third quarter 2025 financial performance. a solid result to follow up on an equally strong second quarter performance. And now back to Todd for his final remarks and a wrap-up. Thanks, Peter. Todd Gleason | Chief Executive Officer: Let's transition to looking ahead, including our initial 2026 outlook. On slide 12, we summarize positive market and operational items, as well as certain challenges that are incorporated in our 2026 outlook. We continue to believe energy transition investments, such as more power generation, more natural gas infrastructure, and LNG investments, and a business-first friendly policy agenda, which allows investments to flow quickly to create economic benefit. These are all meaningful positives to energy transition, positives to our customers, and positives to Seco. We also see other positive market dynamics for industrial air and industrial water, each with a set of bullet point items listed in their sections. Each of those has a very large pipeline of opportunities as we navigate Q4 2025 and throughout our 2026 sales outlook. I can't stress enough how well positioned SECO is for general industrial investment and expansion globally. And now that we have firmly established a global water platform, we are also very well positioned for large wastewater and produced water projects. It remains a very exciting market dynamic and we continue to invest to advance our leadership and support our global operations. As for potential challenges or uncertainties, several of these same themes, several of these are the same themes from earlier in our earnings deck. We continue to monitor tariffs and inflation. regulation changes, and resource availability. These aren't new themes, and these aren't new potential challenges, so we believe we have a lot of programs and processes in place to navigate these various items. Now, please move to slide number 13, and then let me provide our initial full-year 2026 outlook. I'm very pleased to share this outlook as it demonstrates the ongoing strength of our operating model and our leadership position in growing markets. Starting with orders, we are targeting orders to exceed $1 billion, and the slide highlights a greater than 1.1 book to bill. We have the sales pipeline to overdrive this book to bill level, and we are very excited to work with our customers to eclipse $1 billion in bookings. As you know, this bookings level is a preview of revenue levels in outer periods, and we certainly are ready to be a billion-dollar revenue company on our way to much more. Full year 2026 revenue outlook is projected to be between 850 and $950 million, which is up between 15 to 25% year over year when compared to 2025's midpoint. Our estimated 2025 year end backlog of approximately 750 million or greater gives us significant visibility as we start 2026. And depending on how bookings to occur in both Q4 25 and Q1 of 26, we'll know a lot more about this revenue range for next year. Moving to adjusted EBITDA, our outlook is between 110 and $130 million, up between 20 and 40% year over year, when compared to full year 25. We expect, with the revenue execution of major power jobs, that gross profit will be slightly down year over year, but that will be more than offset by savings in our SEG&A. As a result, we expect adjusted EBITDA margins to be up between 110 to 150 basis points year over year. Adjusted free cash flow is expected to convert between 50 to 60% of adjusted EBITDA based on achieving major project billing milestones and continued working capital management improvements. So, as we sit here in October and provide outlook for 2026, we have a lot of visibility and a lot of momentum. This gives us the confidence that providing initial guidance with strong double-digit top and bottom line growth, which comes immediately after what will be a banner year in 2025, It's something we are very comfortable doing. Okay, please turn to slide number 14. This might be my favorite slide. There's a lot to like here. Certainly a lot of graphics going up and to the right. A lot of great double-digit growth and steady margin expansion. What I like most about the slide is how we have demonstrated and continue to maintain high-performance, sustainable results. The numbers jump out at you. Our four-year backlog CAGR of 34% growth. Our five-year order and five-year revenue CAGR each with 23% growth. Our five-year adjusted EBITDA CAGR of 35% growth. It's just steady, solid performance, and it's not an accident. We continue to invest in people. We continue to invest in growth programs and global expansion. We continue to invest in operating excellence to drive safety, quality, on-time delivery, and cash and working capital management. We continue to deploy capital smartly to generate the best economic returns for our shareholders. In fact, perhaps the best number that's not even on this slide is our shareholder returns that we've generated over the last four to five years. We look forward to delivering more for our customers and shareholders as we deliver great results for many years to come. Okay, let's please move to our last slide, which is number 15. As we begin to wrap up 2025, we believe Seco remains well positioned to benefit from our diverse and market exposure and key mega themes that remain very strong. Our $5.8 billion and above pipeline, sales pipeline, provides tremendous visibility into many exciting opportunities. I'm very pleased with our Q3 and year-to-date 2025 performance. Year-over-year, backlog up 64%, orders up 44%, and revenue up 46% in the quarter. This level of growth just continues to be sustained, and our 124 basis point margin expansion is something we're pleased with as well. I'd like to thank Team Seco for relentlessly delivering for our customers. And we continue to be bullish with respect to our full year outlook and, of course, the 2026 outlook that we just provided. Another strong year of double digit top line and bottom line forecasts. With that, we'll pause and open up the line for questions. Operator? Tanya | Conference Operator: Certainly. At this time, we will conduct a question and answer session. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile our Q&A roster. And our first question will be coming from Rob Brown of Lake Street Capital Markets. Your line is open. Rob Brown | Analyst, Lake Street Capital Markets: Good morning. Congratulations on all the progress. Todd Gleason | Chief Executive Officer: Thanks, Rob. Morning. Rob Brown | Analyst, Lake Street Capital Markets: Just first on kind of the project pipeline, I think you talked about some large kind of projects in the works in terms of the industrial water side in particular and I guess the PowerGen side. Could you give us a sense of where those are at and sort of what those projects entail? Todd Gleason | Chief Executive Officer: Yeah, I'll start. Peter can add certainly some color to this as well. We'll start with industrial water. The larger projects, and we're really well positioned, we feel, globally, and we're excited about a lot of the U.S. domestic applications and growth that we see. But the larger projects are mostly based in either the Middle East or even in various regions around Asia. They relate to, you know, produced water or water reuse applications in very large installations. We believe that our growing... You know, reference sites and our relationships with large organizations and EPC firms sort of puts us in a win-win position. If they secure the projects, you know, we're their technology of choice. So we're working through the timing of those items. We're excited. We've had a constant dialogue with them throughout the year. And so really right now at this point, it's really all about timing in terms of that. And those larger jobs would be predominantly based in the Middle East. Rob Brown | Analyst, Lake Street Capital Markets: Okay, great. Thank you. Rob Brown | Analyst, Lake Street Capital Markets: And then the 2026 outlook, I think you have pretty good visibility there with the current backlog. But, you know, are there projects that can come in that can move that up? I guess what's sort of the ability for that to move up, I guess, in terms of project activity? What would have to happen to kind of hit the high end of that number? Todd Gleason | Chief Executive Officer: Yeah, no, I mean, look, I can, by the way, I appreciate that we're sitting here a few days before Halloween and we're already talking about raising guidance next year, Rob. Well done. But joking aside, let's be clear, right? Like, look, we have a $5.8 billion sales pipeline. That means these are jobs. that over the next 18 months, we have high confidence, we'll move forward, and we will either win or lose our participation on those programs. That is multiple billions higher than it was just a few years ago, and we're growing, obviously, at a strong, sustainable double-digit pace. As we look at what's in the you know, more nearer term, Q4 of this year, first half of next year, I might even say Q1 of 2026, certainly there are a handful of larger projects that we see the revenue profile associated with those projects being something that we can model in 26 and in 27. So it really depends on If those projects, those specific projects move forward and how many of those do we win in Q4 and in the first half of next year, let's go with Q1, If, let's say, instead of winning one of two, we win two of two large industrial water jobs, or instead of one $75 to $125 million power job, we win multiple, which we can serve in our capacity, then that skews our view because we certainly haven't baked in every one of those jobs in our outlook. So, to be fair, we have the visibility in our backlog and in our expected win rate to drive performance relative to the outlook that we just provided. And it's very early, obviously, versus when most companies give a 2026 outlook. So, I'd say we have a high degree of confidence that what we were modeling in based on our expectations is is something we're proud of. However, yes, there are always levers that can occur throughout the next few quarters that gives us even more visibility to what could be a higher 2026. Where we sit right now, we would say we don't think we're being conservative. We also don't think we're emptying the cupboards on 2026. We think we're in the right place, and we believe this guidance reflects that. Rob Brown | Analyst, Lake Street Capital Markets: Okay, thanks for all the color. I'll turn it over. Tanya | Conference Operator: And one moment for our next question, which will be coming from Aaron Spichala of Craig Halem Capital Group. Your line is open, Aaron. Aaron Spichala | Analyst, Craig-Hallum Capital Group: Yeah, good morning, Todd and Peter. Thanks for taking the questions. You know, maybe first for me, just on the pipeline and power generation, can you maybe give us an update there? It seems like, you know, in the market, there's a focus on, you know, improving power you know, connections at the data center level and just getting to market faster. You know, are you seeing, you know, any acceleration in the pipeline there on the order front and just, you know, maybe give a little more color on the activity levels there? Todd Gleason | Chief Executive Officer: Yeah, I don't know that we're seeing acceleration. I think we're seeing, you know, a very robust space with a lot of headlines and a lot of, you know, a lot of activity. No doubt, you know, it's easy and important to read what some of the more, you know, larger organizations like GE Vernova and Siemens and others are talking about as they clearly are leaders in providing so much of the important power generation equipment, and we love partnering with them. And those conversations continue to be positive. And yes, there are times when things accelerate and ebb and flow, but they don't seem to be decelerating, I'll say that much. But I would say where we were A few quarters ago, I would say we feel very confident to that pace being, you know, pretty sustainable. The pipeline is well over a billion for us of just those projects over the next, you know, 12 months or so. And so it's a very active set of discussions. Peter? Peter Johansen | Chief Financial Officer: It's easy to become overwhelmed by all the reporting on data centers. I think we all have to be a little, say, more balanced in our view of how much of that becomes reality. And if you dig into the large OEM, gas turbine OEM backlog information, you'll see that they are also suggesting that the international demand is every bit as exciting as North America. That's because there is tremendous needs for power, both for industry as well as for the transition off of coal in those regions as well. So I think we have to be careful that we, and we are careful, and that we look at our pipeline in a way that ensures that we balance the best of the opportunities with where they're occurring globally. And what Todd was referring to in his remarks earlier was that there's a lot of near term in the U.S. to serve the data center demand. But this is a multi-year cycle that's going to run for at least, we view out through 2030, 2032. And so, and this is somewhat to Rob's point as well, we could get it all today. And if we got it all today, still deliver over the next three to five years. So it's a multi-year story. And I just caution everyone in getting overly excited about these headlines because it takes years to build a plant. It takes years to deliver the equipment. It takes years to turn it on. Todd Gleason | Chief Executive Officer: And by the way, Aaron, and only saying this because we've talked about this with you and others, and also been asked this question and maybe coming up on this Q&A, we, SECO, in our solutions with respect to power, call it later in the cycle of the power bills, meaning we're providing the thermal acoustic noise abatement, emissions management. Yes, there are some areas where we're in the gas infrastructure side with separation filtration, but as our larger solutions on these power jobs, come in the second to, you know, later half of a project, not the beginning. We may be in early conversation and bidding and participating in budget assessments and planning, but we don't win the jobs until later in the cycle. So as this cycle continues to mature, we're starting to hit our stride, if you want to call it that. Aaron Spichala | Analyst, Craig-Hallum Capital Group: Right. Understood. Thanks for the call, Eric. And then maybe just switching to margins, you know, you talked about 100 to 150 bps of kind of targeted EBITDA margin expansion. Can you just maybe talk about the confidence there? You know, sounds like there might be some mix just from some of these larger projects on the gross margin line. But you also talked about, you know, some of the early efforts on 80-20 and other lean initiatives and SG&A reductions. Just maybe help provide some color there, please. Todd Gleason | Chief Executive Officer: It's really at least a three-pronged, steady approach for us, and we have confidence in this approach. In no particular order, think of, number one, the volume that we continue to generate allows us to have a lot of visibility, not just through our backlog and margins in our backlog and in the projects, And we're talking about gross margins, which might be a little lower than the current company average of 34, 35%. But the EBITDA margin from those jobs is higher than the company average. So we like the dynamics, number one, of what the volume represents, just in terms of continued steady margin expansion. Number two, we have invested throughout the last few years in a lot of areas to support and to drive growth And those investments will continue, but as we get larger and we approach a billion, they sort of modulate, right? They're able to be absorbed with more sales. And so that's prong number two, if you will, is that we're going to just get more G&A leverage and even some – S&E leverage as we get growth from resources that are already in place. And then last but not least, and in fact this is driving a lot of our nice gross margin expansion over the last few years and will continue to bolster and improve that area, it's that our operating excellence teams and investments in other areas of cost management like 80-20, which we're just now deploying in the fourth quarter in our first set of businesses, are really targeted at maximal efficiencies, right? They're targeted at finding ways and then executing on ways to get more logistic savings, to get more cost management savings in our operations. A lot of our businesses have grown rapidly over the last few years, and 80-20, for example, is one process that really goes back and looks at Now that you're twice the size you were four years ago, how should you redesign your organization for maximal efficiency given your new normal levels of operations? So we believe and know that operating excellence in 80-20 That third most important prong to really get our gross margins sustained and higher and to get our EBITDA margins to eventually those mid-teen results. We just like the steady approach of getting it up 100, 150 basis points next year, maybe higher. Certainly would depend a little bit on volume and some of the mix. But, you know, look, we're on our way to the mid-teens, if not higher margins over time, and we're just having that balanced diet of areas and processes that we think are important. Rob Brown | Analyst, Lake Street Capital Markets: Appreciate that. I will turn it over. Thanks. Thanks, Aaron. Tanya | Conference Operator: Thank you. And our next question comes from Jerry Sweeney of Roth. Your line is open. Jerry Sweeney | Analyst, Roth: Good morning, guys. Congrats on a nice quarter, and thanks for taking my call. Peter and Todd. Hey, AI topic du jour, so let's stick with it, but just curious on the project side. So some of these data centers, they're switching different power, going a little bit more towards disaggregated power opportunities. Are there any opportunities in those locations for you guys versus the large turbine builds, et cetera? Peter Johansen | Chief Financial Officer: It depends on how they choose to power the microgrid. Yeah. If it's reciprocating equipment, the answer is little opportunity. If it's small format industrial gas turbines or aerodirivative gas turbines, there are certainly opportunities, but it depends on how the solution is defined. and how many are present. The challenge in answering that question definitively is there's no single standard concept for any of these solutions. Jerry Sweeney | Analyst, Roth: Got it. Understood. And then just sticking with the AI stuff or the power generation and build-out, at some point, does that expansion – for lack of a better word, stall just because there's just not enough capacity at some point in some of these build-outs. So instead of it being a higher hump, it's more of an elongated process. And do you have a sense of where that is, if that's true? Peter Johansen | Chief Financial Officer: Well, I think the answer is we say it is, yes, it will be elongated because there isn't enough supply to deliver what is presently being called for or demanded. When you hear numbers being thrown around like a trillion dollars of investment in data centers is going to $3 trillion per year, it's eye-watering, and it's kind of hard to kind of make sense of it all. But Jensen Wong will be telling us it's going to be $3 trillion a year for the next decade in order to satisfy global demand. That suggests that the amount of megawatts that have to be delivered to power that is – well in excess of what industry can supply today and will be providing it for many years to come. We also can't forget there's three other demands being placed on our power grids. We have a demand for new businesses, new manufacturing returning to the US and other developed countries. So that reassuring dynamic is raising the demand on energy. We have the electrification of everything. from transport to manufacturing process to heating and cooling to, you know, moving goods within warehouses. That's another source of demand. And finally, you've got, you know, AI is what people are focused on, but good old-fashioned computing. You know, cloud computing and more people operating computers for gaming and for crypto mining and for trading all requires electricity. and they're all going to be put on the grid in waves. And there's plenty of analytics that suggest this is going to run to 2040 at some level, going to run to 2030 at an elevated level. We're just at the beginning. Jerry Sweeney | Analyst, Roth: On that front, historically, I think a lot of your M&A has been maybe in the water and industrial side. Do you look at the opportunity on the power side? Are there acquisitions or opportunities for you to expand you know, adjacent to what you're doing or add additional solutions to expand your wallet share? Todd Gleason | Chief Executive Officer: Sure. You know, our pipeline is balanced. We like it to be that, you know, we push all of our businesses to think of ways organically and inorganically to advance their leadership. That's true in our energy businesses. Look, you know, to your point, our transactions have been more skewed to building and advancing a leadership position in industrial water, certainly doing the same in industrial air. But, you know, we've made some smart investments. The Transcend acquisition, separation filtration business, which has a large aftermarket and installed base, You know, it was a great investment, high-margin investment for us that we made a few years ago. It continues to grow. We've doubled the business as we start to really stretch our legs on that acquisition. There's others that we would look at doing in this space as well. Jerry Sweeney | Analyst, Roth: Got it. Okay. Well, guys, well, great quarter. Congratulations, and I appreciate the time. Thank you. Tanya | Conference Operator: And our next question will be coming from Bobby Brooks of Northland Capital Markets. Your line is open, Bobby. Bobby Brooks | Analyst, Northland Capital Markets: Hey, good morning, guys. Thank you for taking the question. I was just curious to double-click on the 2026 guide. I was just curious what – and I know you've touched on it a little bit, but just to go a little bit deeper, what sort of macroeconomic backdrop are you assuming in the ranges of your 2026 guide? Todd Gleason | Chief Executive Officer: Yeah, look, I think we're – stable, I think is what I start with that word. We're not, we don't feel we need a, you know, a significant positive change in the macroeconomics. We're, you know, I think we're reading the same headlines and we're sensitive to certain things that could influence the economy, whether it's interest rates and, you know, tariffs. Certainly we've all become, you know, much more accustomed to the dynamics that exist with the direction changes at times around the tariff topics. And I think supply chains have been stable in their management of that. I think that there's certainly things that could change our view of the macro economy, because we certainly aren't on an island if things go completely different. But we certainly don't see a major positive or negative swing over the next 12 months. We think that there are reasons that things could change. But where we sit right now with our pipeline and our And our backlog, look, for us, Bobby, frankly, it's about the visibility of pretty steady markets, right? Like, it's hard for us to sit here today and say that over the next six months, these important power jobs are going to care about some of these headline topics, right? I mean, certainly things can change that. But, you know, tariffs and interest rates aren't going to really change these important investments. Same thing with reshoring. These water projects are somewhat unrelated to the general economy. So we're not, as you well know and have done a great job of analyzing, we're not super sensitive to short or intermediate changes in, let's say, consumer sentiment or consumption. you know, certain geographic specific shifts. We're probably, given that 100% of our sales is an industrial, with industrial customers that are really in, you know, expansion and investment mode and a multi-year theme, it's hard for us to see a major economic shift in that. spk12: Got it. That's really helpful, Colin. Bobby Brooks | Analyst, Northland Capital Markets: And then I wanted to circle back on the cross-selling opportunities with Profire. So you've had had Profire under your umbrella for nine, 10 months now. And I know one of the most exciting pieces to that acquisition was across selling opportunities with their application that historically had only went into U.S. oil field service customers to then cross sell that into your wide range of industrial customers, as well as bringing it to your international OFS customers. So just curious to kind of hear an update on that and how that's progressed so far. Todd Gleason | Chief Executive Officer: Yeah, look, it's still a huge, we think, opportunity for Profire as a business. And we spend a lot of time with the team, including recently, including, by the way, them being one of the early businesses where we're going to be deploying and utilizing 8020 to really get a firm grasp of how we can implement it at Seco. So a lot of dialogue with Profire, both in terms of opportunities to cross-sell and to break into new geographic and industrial markets. I think that there's a lot of good progress. Look, it's still only been nine, ten months. We always say we give it a year. We let our businesses get sort of settled in. We look for ways to invest operationally and commercially. Those programs are being put in place now. The team, I know, is very excited to be to be part of SECO. Certainly, you know, they're looking at market dynamics within their core markets in the oil fields and energy applications. So, you know, they're constantly looking at ways to innovate and to make investments. So we've had some good discussions about organic and inorganic investments in Profire. I continue to believe it's a business that, you know, is a $100 million business in a few years down the road. And some of those are certainly the result of our ability to bring their product into more industrial and international applications. Bobby Brooks | Analyst, Northland Capital Markets: Super helpful, Colin. And then just last one for me, Todd, you know, you're quoting the press release saying, depending on timing, fourth quarter this year could be the largest booking quarter ever, which is some really strong commentary and not something you specifically noted in prior press releases. So I was just curious, aside from the multitude of shots on goal you have, especially with the large power jet and water projects. What else has given you confidence to speak to that? And maybe have you already had strong orders quarter to date through October? Thank you. So, yeah. Todd Gleason | Chief Executive Officer: Look, good catch. And, you know, obviously we put it in there for sort of a reason. And that reason is quite simple. You know, Bring these two things together, Bobby. One is we just delivered our fourth consecutive quarter of orders well over $200 million. And we're very pleased with orders north of $230 million. And that... This past quarter, the third quarter, while it gave us very nice year-over-year growth and a new record backlog, it really didn't include any of the large, call them mega jobs. It certainly had several very important and decently sized jobs, and historically certainly would have been jobs that we might have called out. because they were, you know, between 20 and let's say 40 million. But for where we're at now in both power and in international industrial water, they're not going to represent some of our larger jobs. And so the fact that, you know, let's say in our largest quarter year to date, we had one mega job. And in the third quarter, we still produced over 230. We didn't have one. And yet, we believe we're very close in terms of timing on a purchase order, which is how we book a job. Even if we have a verbal, we don't book anything until we have all of the T's and C's and purchase orders and everything completed. So I think it's a confidence and Not just the visibility in our pipeline, but where we're at in several, not just one, but maybe several relationships and dialogues and verbals that we're getting from customers. So, look, if the timing in Q4 is more than one, but several of those occur, now you're looking at our first quarter with more than one mega job. And that will give us, you know, certainly that's the confidence that we have, and that's why we're sharing it. You know, look, if it doesn't happen, we're still – we have a lot of visibility to another great quarter of well over $200 million. But if they do happen, then, you know, as I said in our prepared remarks in the call, we will see – well, we believe we could see a quarter over $300 million. spk12: Excellent call. I appreciate it. And congrats on a good quarter. Thank you. Todd Gleason | Chief Executive Officer: Thanks, Bobby. Tanya | Conference Operator: Thank you. And our next question will be coming from Jim Ricciuti of Needham and Company. Your line is open, Jim. Jim Ricciuti | Analyst, Needham & Company: Thank you. I answered one of them. I'd like to just follow up, though. Peter Johansen | Chief Financial Officer: Jim, we're having a hard time hearing you. The line is choppy. Jim Ricciuti | Analyst, Needham & Company: Yeah. Okay. Any better, Peter? Just any better? Todd Gleason | Chief Executive Officer: A lot better. A lot better. A lot better. Good. Thank you. Jim Ricciuti | Analyst, Needham & Company: Good. Good. So, yeah, it's a follow-up question just on gross margin. Okay. I appreciate the commentary and citing the sequential, the seasonal issue in gross margin in Q3 of last year. But on the other hand, you had, I think, a sequential decline in revenues in Q3. So I'm just trying to get comfortable with what's happening with gross margin. Peter, you alluded to something. I may have missed it. You talked about some issue, a closeout issue. that impacted the Q3 gross margin. Wondering if you could size that for me. Peter Johansen | Chief Financial Officer: It was about, it contributed 30 to 50 basis points of the reduction. It was a project that we decided we would negotiate with our client to get it closed, get all outstanding change orders recognized, put it behind us, free those teams up and move on. It was a project that started out with a lot of uh, positive vibes. And at the end, it was just one of those where, uh, we decided we probably needed to terminate and move on, move on from each other. Jim Ricciuti | Analyst, Needham & Company: Got it. Um, thanks. Todd Gleason | Chief Executive Officer: And, and just, I'm sorry, I was going to, I just want to add to, uh, you know, look, um, our, our, seasonally, our softest quarter from a gross margin perspective is historically Q3. So we sort of model in a decline just naturally. There's just certain cost of good sales, costs that get sort of trapped in the quarter while volumes were solid. Just the dynamic of the quarter is typically different. a lower quarter for us from a gross margin perspective. You'll see it if you look back at most of our Q3s. It's not a guarantee that it's always going to be the softest of our quarters, but I would be willing to bet that 80% of the time, Q3 for us is the most impacted quarter. from a gross margin if it dips it's going to dip in q3 so again i'm not trying to just say well you know it's a seasonal thing but we we already had it modeled in that we were going to have a bit of a decline there's always some smaller pieces like peter mentioned that you know could be 30 to 50 basis points of additional contraction um you know some inflation uh did occur in in the third quarter which you know the timing of which is something we're going to work through just like we have in other quarters um and so look we we're not We were very happy with where our gross margins were year-to-date prior to Q3. Q3 was not different than we had sort of imagined it could be. We believe that we're going to get back to higher gross margins. But certainly, we've seen some impacts in inflation. It's modest. Jim Ricciuti | Analyst, Needham & Company: Okay. That's helpful. Thank you. And again, we're looking at the 2026, it sounds like you're assuming somewhat lower gross margin, or maybe I misinterpreted your comment. And that's really, if that's the case, that's a function mainly of mix both industrial air and industrial water, a larger percentage of some of these bigger deals. Todd Gleason | Chief Executive Officer: Yeah, I think we are just providing a view that if our gross margins in 26 are lower on average than 25, it's mostly because of mix. Large power jobs, large water jobs that would just have lower gross margin, but would maintain very good EBITDA margins because the amount of G&A associated with those jobs is minimal, and they're large jobs. So just the scale, the mixed scale size of these large jobs would be hard for us to overcome mathematically. gross margin but not hard for us to overcome in terms in fact would be beneficial to the EBITDA line so it's it's more an indication that if gross margins are a little lower next year we don't believe it's a dynamic that's changing in price or inflation those are things that we feel comfortable with in fact look there are potential opportunities in nuclear in defense in and in a few other areas of aftermarket and short cycle, that if they occur throughout the year at the volumes that they could, those gross margins are materially higher than the average CGROW gross margin and can certainly work to offset any natural gravitational pull down on margins from large power jobs and large water infrastructure jobs. So, look, right now we're balancing it out. We don't give gross margin outlook for the year. We're just signaling that if it is lower, we're not sure that it's a real headwind as much as it is just the, you know, mathematical dynamics of the size of the jobs that are pulling it down. Rob Brown | Analyst, Lake Street Capital Markets: Got it. Thank you. Operator | Conference Operator: And one moment for our next question, which will be coming from Joseph Giordano of TD Cohen. Tanya | Conference Operator: Your line is open. Joseph Giordano | Analyst, TD Cowen: Hi, good morning. This is Chris on for Joe. Have you observed any change in customer sentiment or project timing for water, wastewater, infrastructure investments, contingent in part or whole on some form of government funding? as a result of any changes in pace of disbursement from Infrastructure and Jobs Act? Todd Gleason | Chief Executive Officer: Yeah. We don't. And I think, you know, I don't want to sound like we're unique in the fact that we're saying we don't. I would say it's mostly a quick and confident answer that we don't see an impact because in the large infrastructure jobs that we're participating in, they're not – U.S.-based programs or even necessarily European-based. They're located in regions where either that dynamic isn't occurring, where there's governmental pauses or large program timing associated with monies. Instead, there are other investments that criteria altogether. Joseph Giordano | Analyst, TD Cowen: Great. And can you provide an update on how your short cycle business trended during the quarter, and it's expected to be a large share of the mix in the 2026, and what you see contributing to that? Todd Gleason | Chief Executive Officer: Yeah. So, you know, the mix of our short cycle is steady, but the short cycle businesses are growing nicely and continue to add, you know, I think, you know, great results to our performance. Mix is tricky because if we have large power jobs, and certainly those are longer cycle. If we have large water jobs, those can be longer cycle. So the mix all of a sudden looks like it's staying steady when in fact short cycle could be growing rapidly inside our organization. Just hard to overcome the mix shift. But, you know, look, we, you know, four years ago, we had at best 20% as a percentage of sales in short cycle. We continue to be up above 30%. Now, again, the mix of that can change depending on the jobs. But, you know, our goal over time is is through organic and inorganic balance to find 50-50. That continues to be our goal. It might not be a 2026 dynamic because of how our jobs are going to flow through our P&L. But again, we like the fact that we continue to add applications and businesses with a lot more aftermarket content, you know, more filtration, more aftermarket parts and services. So, you know, it is a continued investment for us, but the short cycle has been pretty steady throughout the year. Joseph Giordano | Analyst, TD Cowen: Great. Thank you very much. Todd Gleason | Chief Executive Officer: Thank you. Tanya | Conference Operator: And I am showing no further questions. I would now like to turn the call back to Todd Gleason for closing remarks. Todd Gleason | Chief Executive Officer: Thank you very much, and thanks, everyone, for the questions and, of course, the interest in our information today. Importantly, to our global teams that are delivering incredible value for our customers, thank you very much for all that you do. You know, it's important for our customers that we have the most talented organization to protect people, to protect the environment, and to protect our customers' investment in their industrial equipment. We're passionate about that. We are going to be presenting at several conferences in November and December. The information of those can be found at our investor relations website. We look forward to meeting with many of you when we're out on the road as well. So with that, we're going to end the call today. We appreciate it, and have a great day. Tanya | Conference Operator: And this concludes today's conference call. We appreciate your patience. You may disconnect. jsPDF 3.0.3 D:20260606090038-00'00'

NASDAQ:CECO Q2 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Operator: Good day and thank you for standing by. Welcome to the Seco Environmental second quarter 2025 earnings call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised today's conference is being recorded. I would not like to end the conference over your speaker today. Stephen Hoosier, Investor Relations, please go ahead. Stephen Hoosier | Investor Relations: Thank you, Kevin, and thank you all for joining us on the SECO Environmental Second Quarter 2025 Earnings Call. On the call with me today is Todd Gleason, Chief Executive Officer, and Peter Johansen, Chief Financial Officer. Before we begin, I'd like to note that we have provided a slide presentation to help guide our discussion. The call will be webcast along with our earnings presentation, which is on our website at secoinviro.com. The presentation materials can be accessed through the investor relations section of the website. I'd also like to caution investors regarding forward-looking statements. Any statements made in today's presentation that are not based on historical fact are forward-looking statements. Such statements are based on certain estimates and expectations and are subject to a number of risks and uncertainties. Actual future results may differ materially from those expressed or implied by the forward-looking statements. We encourage you to read the risk described in our SEC filings included on Form 10-K for the year ended December 31st, 2024. Except to the extent required by applicable securities laws, we undertake no obligation to update or publicly revise any of the forward-looking statements that we make here today, whether as a result of new information, future events, or otherwise. Today's presentation will also include references to certain non-GAAP financial measures. We've provided the comparable GAAP and non-GAAP numbers in today's press release and provided non-GAAP reconciliations in the supplemental tables in the back of the slide deck. And with that, I'd now like to turn the call over to Todd Gleason, Chief Executive Officer. Todd? Todd Gleason | Chief Executive Officer: Thanks, Stephen. Good day, everyone, and thanks for your time, as well as your continued interest in SECO. As today's press release highlighted, in the second quarter, we delivered a number of financial records. Our Q2 and year-to-date results reflect positive impacts from the investments we have made to build and execute our operating model that continues to yield high-performance results while strategically and sustainably transforming our portfolio. As always, we strive to deliver leading environmental solutions to our global industrial customers, ensuring we protect people, protect the environment, and protect our customers' investment in their industrial equipment. Now, please turn to slide number three for a summary of the highlights of the quarter. In the quarter, we grew backlog to a new record, exiting the quarter at $688 million. Year over year, our backlog is up almost 300 million, or more than 75%. Sequentially, our backlog rose an approximate $80 million. This was made possible by another quarter of record orders. In Q2, we generated $274 million in new bookings. This is up 95% versus Q2 last year. We booked our largest ever order, an environmental selective catalytic reduction, or SCR, emissions management solution for a major project in the U.S. power generation market. We continue to be very well positioned for future projects of similar or even larger scale and complexity. When combined with orders from the first quarter, our first half of 2025 book to bill is approximately 1.5. If you expand your look back and add just one more quarter, this is the third consecutive quarter with bookings of over $200 million for a total of approximately $720 million in new orders in the past three quarters. This level of orders is a direct result of several years of focused strategies to diversify our portfolio, gain access to new vertical markets and geographies, and to introduce new products and services. We believe we are well positioned for continued strong order bookings. Revenue of $185 million in the quarter, up 35% year over year, we're also a new record. as we continue to deliver strong project execution and navigate market dynamics. Adjusted EBITDA at over $23 million was up 45% year-over-year driven by volume, strong gross margins, and an improving SEG&A cost profile. A few months ago, when we discussed our Q1 earnings, we articulated we had taken G&A-related cost actions. We're starting to see the benefits of those actions and our operational productivity initiatives. And in the final metric on this slide, we show EPS was 24 cents in Q2. This is up approximately 35% year over year. So overall, just great record results with solid performance. We exit Q2 with an incredible backlog and strong orders and margin momentum. Now let's turn to slide number four. While we feel that Q2 was outstanding on many performance metrics, I think it's even more impressive to appreciate this isn't just a one-quarter phenomenon. On this slide, we capture a few data points and comments that highlight the first half of the year's performance and bolster my comments on our ability to deliver consistent results. First half bookings of over $500 million are up 76% when compared to the first half of 2024. First half revenues were up 37%. Like I said previously, we booked our largest ever order, and we believe we have several similarly sized opportunities in power generation and industrial markets ahead of us. The profile acquisition, which we closed in early January this year, is delivering on the various synergies we discussed when we announced the transaction. And our continued multi-year growth of our sales opportunity pipeline is now over $5.5 billion. We feel very good about the key markets we have targeted with our investments and resources. We believe we have a multi-year opportunity with large growth themes. And those growth themes are captured in the far right column on this slide. The market continues to see an unrelenting demand for power generation. We are also seeing a strong uptick in semiconductor inquiries, as well as natural gas infrastructure and industrial water solutions. And aside from some softness in Europe, we are seeing steady demand in almost every other region. We are expecting some modest inflation in the second half, but we are pleased with how we have been able to offset early supply chain cost increases with either productivity, price, or overall project execution. Now please turn to slide number five. As today's press release highlighted, we are raising our 2025 annual guidance for orders and revenue while reiterating our outlook for adjusted EBITDA and adjusted free cash flow. Starting Top to bottom, we are raising our 2025 full-year orders guidance to exceed full-year revenues, thus delivering another positive book to bill for the year. We now expect our bookings to be 1.2 times revenue, resulting in a bookings range of between $870 million and $930 million. The strength of our full-year order outlook is supported by robust underlying markets, a very active and significant pipeline of opportunities, and the momentum we have built over the past nine to 12 months of sustainable orders growth. For revenue, we are raising our outlook to $725 to $775 million, up from a previous range of $700 to $750. The $25 million increase on both the lower and the upper ends, reflects the strong first-half performance in bookings and revenue, coupled with a record sales pipeline and negligible project delays this year. The midpoint of our full-year range speaks to revenues growing 35% year-over-year, of which approximately 20 points is driven by organic growth. With respect to full year adjusted EBITDA and free cash flow, we are maintaining our previous outlook. The adjusted EBITDA range of $90 to $100 million points to growth of approximately 50% year over year. Even with the modest increase in our full year sales outlook, we still like current adjusted EPS range and expected margin expansion that it implies, which we expect to be higher than 12% to up to low teens in the year. This outlook continues to absorb our expectation that we will experience modest inflation in the second half of the year. It also includes an expectation we will add resources later this year to prepare for what we see as 2026 growth. our record backlog and our full year book to bill expectations, we can actually start to model double digit growth for 2026. So of course, we want to ensure we are prepared to execute on that solid growth. Now let's turn to slide number six. We often talk about the strength and size of our sales opportunity pipeline, but I wanted to spend a couple minutes here to describe two key important items. First, that the pipeline is our best indicator of short and medium term organic revenue growth. And second, the building and maintaining a large and healthy pipeline does not come without appropriate investments in people, processes, and systems. As you can see on this slide, there is a strong correlation between the size or value or growth of pipeline and the level of bookings when you compare the two periods that we present. On the left side of the slide, for the period 2015 to 2020, you can see the pipeline was essentially flat over those five years. And therefore, orders and revenue trended flat to down over that same period. By comparison, on the right side of the slide, in 2021 to this year, our pipeline has grown almost 40% annually on a compounded annual growth rate basis. As our pipeline grew, so did the revenue performance, with a normal lag time associated with bookings turning to revenue. The second point I want to make is that maintaining a consistently high level of viable opportunities certainly doesn't come for free. This level comes as a result of sustained investments in talented commercial teams, business systems and processes, and market entry that has allowed Sequel to penetrate new markets and customers, which in prior years wouldn't have necessarily known our name or our brands. And as long as market conditions are supportive and our global opportunity set is expanding, we will continue to sanction these increased investments to maintain and accelerate Sequel's growth. Five years ago, when I joined Seco, I knew it would not be easy to break out of the company's historic revenue range of limited to no growth. It would take expanding our sales pipeline by focusing aggressively on winning markets, by investing in new geographies, by diversifying our product and service offering. As we approach our new revenue outlook of roughly $750 million for the year, and we expect on our way to a billion-dollar company, we are pleased we have the business model in place to continue to grow our sales pipeline. It might not have been easy, and we have certainly come up short on a few things, but overall, we are very pleased with our long-term growth and how well we continue to transform the portfolio. I really look forward to the next five years. I will now hand it over to Peter, who will go through more detail on our financial results. Peter? Peter Johansen | Chief Financial Officer: Thank you, Todd, and good day, everyone. Thank you for joining Todd and I for SECO's second quarter of 2025 earnings call. I'd like to start on slide eight, and I'll provide some additional color on our financial results for the quarter. SECO finished the second quarter with a record backlog of $688 million. This is up 76% versus prior year and a 14% increase sequentially. Of the total, approximately $70 million is related to the recent acquisitions with the balance of the increase coming from organic orders growth. The second quarter of 2025 represents the 10th of the last 11 quarters showing a backlog increase. The increase was helped along by strong orders in the power generation, semiconductor, industrial water, natural gas infrastructure and markets. broad growth across a range of applications. As Todd previously mentioned, this was the third consecutive quarter where SECO delivered orders greater than $200 million with our second quarter orders of $274 million, up 95% versus prior year and 20% sequentially for that book to bill of approximately 1.5 times in the first half of the year. On a trailing 12-month basis, orders totaled $883 million, up 58%, representing a robust book-to-bill of 1.35 times and a record for any 12-month period in company history. Driven by demand in power, natural gas, semiconductor, and industrials produced in wastewater separation applications, SECO booked over one-half a billion dollars of orders for the first six months of 2025. As mentioned in our press release this morning, the company booked our largest ever order in a quarter for a project in the power generation segment. That order, plus a number of small to medium-sized projects for natural gas infrastructure and power generation, yielded over $140 million of our total bookings in the quarter. with the remaining one-half coming from industrial air and industrial water customer segments and applications. Quite a diverse and well-rounded order book for the quarter. Revenue in the quarter of $185 million was an increase of 35% year-over-year, with approximately 20 points generated by the company's most recent three acquisitions and the balance of the growth driven by organic results. Sequentially, revenue was up 5% despite the natural headwind related to the sale of the Global Pump Solutions business that closed at the end of the first quarter. In the quarter, project-related delays that impacted revenue recognition in the second half of 2024 have abated, and our quarter-end backlog and pipeline strength gives us confidence in delivering on the updated revenue outlook Todd recently presented. for the second half of 2025 and for the full year. Adjusted EBITDA was $23.3 million in the quarter, an increase of 45% versus prior year, with margins improving approximately 90 basis points. Gross profit margin was slightly over 36%, up 50 basis points year over year. Mixed due to higher short cycle revenue was a tailwind to gross profit margins in the quarter and mainly attributable to our recent acquisitions. SEG&A spending in the quarter benefited from the absence of quarter one expenses that do not repeat in subsequent periods and the initial impact of our G&A cost actions taken in the quarter. Sequentially, adjusted EBITDA was up approximately 65%. with 470 basis points of margin expansion, attributable to higher volumes, favorable mix, the initial benefit of cost actions taken in the quarter, and the absence of the aforementioned non-recurring period expenses from Q1. On a TTM basis, adjusted EBITDA grew 11%, with margins down slightly, impacted largely by the results of Q1 of this year. Adjusted EPS in the quarter was up 4 cents, or 20%, on similar dynamics that impacted adjusted EBITDA, partially offset by higher interest expense in the period. Before I leave this page, I would like to thank the global SECO team for a robust first half of 2025 and reiterate, from my perspective, a few highlights from that first half performance that have positioned SECO very well for an even stronger second half of the year. Orders of $502 million were up 76%. Revenue delivery of $362 million were up 37%. Adjusted EBITDA of $37.3 million in the first half of the year was up 27%. We have made excellent progress on the integration of our three most recent acquisitions, We executed on the separation of the global pump solutions, businesses, and systems, and our transitioning support functions, reaching conclusion at the end of quarter three. And finally, we've continued to advance on our project execution and sourcing initiatives, key elements of our operating excellence agenda. Now let's turn to page nine, and we'll discuss briefly backlog. I will not spend much time on this slide because I think it speaks for itself. With the great performance in quarter two, our backlog is continuing a steady upwards climb as we convert on the growing sales opportunity pipeline. Our $688 million backlog has more than tripled since the end of 2021, and we expect this backlog to fully convert to revenue within the next 24 months, with the majority converting over the next 18. Our book to bill for the first half of the year was very strong, and it was the highest of any recent period, further underpinning our confidence in future revenue growth. Please now turn to page 10, where we'll briefly discuss gross profit and gross margin. This slide, similar to previous earnings decks, presents SECO's gross profit and gross margin performance by quarter since the fourth quarter of 2022. on a TTM basis, which we look at to normalize for quarter-to-quarter fluctuations and provide a look back to the start of SECO's operating excellence agenda. Since the fourth quarter of 2022, SECO has expanded TTM gross profit margins by approximately 500 basis points, with TTM gross profit dollar growth of slightly greater than 80%. In the second quarter of 2025, that most recently concluded, our business delivered gross profit of $73 million and a gross profit margin of 36.2%, an increase of 100 basis points sequentially. Our teams continue to execute very, very well, and this trend is continuing to become our baseline. On a TTM basis, our gross profit margin was 35.2%. well within the range we're targeting for our business. This improvement over the past two plus years is attributable to the progress our teams have made implementing our operational excellence agenda, capturing annualized savings in the range of over $10 million and improving project execution and the impact of our commercial and portfolio transformation initiatives to improve the business mix and to deliver acquisitions with accretive gross profit margins. For the balance of the year and beyond, we will continue to implement and expand on our operating excellence agenda, focused on project execution and sourcing, and to increase our focus on G&A expense optimization and process simplification to further benefit adjusted EBITDA delivery. Please move to slide 11, where we'll quickly review cash flow debt and leverage. Starting on the left side of the page with free cash flow, a schedule is prepared that shows you how we walk from gap net income to adjusted free cash flow on a year-to-date basis. Cash flow in the second quarter was a net outflow of $3 million, which represents a sequential improvement of $12 million versus the first quarter of the year. The improvement was due in large part to higher operating income and net favorable cash payments on projects booked that were then offset by working capital requirements supporting SECO's substantial revenue growth. On a year-to-date basis, the outflow of approximately $18 million is due to elevated working capital funding needs in support of SECO's revenue growth. Capital expenditures of approximately $4.5 million is largely due to investments in our ongoing ERP system migration. On the right side of the slide is a brief summary of SECA's gross indebtedness position with the primary drivers of change in the quarter shown for you. We ended the second quarter with gross debt of approximately $236 million, a modest increase from the end of 2024. Excess cash from the divestiture of the global pump solutions business was applied to pay down the revolver credit facility balance early in the second quarter, which was then subsequently tapped to fund working capital increases. Net debt at quarter end is approximately $199 million, an increase of $19 million from year end 2024. Net debt balance of $180 million. 9 million of the addition, which came from the second quarter of the year. At this level of net debt, SECO's leverage ratio is approximately 2.7 times our bank EBITDA of $74.2 million, leaving us with an investment capacity of 104 million, an increase of 35 million from the end of 2024. This is more than adequate to fund our growth needs our investment needs, and the support of a future M&A in the back half of the year, in which we remain active in cultivating various M&A opportunities. But in the near term, we continue to focus our capital deployment on further reducing our debt levels and leverage ratios to further strengthen our balance sheet and reduce cash interest payments. I've now concluded my remarks on SECO's quarter two 2025 financial results, which I consider to be very solid and a strong recovery from a somewhat slow start to the year. And I now want to hand the mic back over to Todd for his final remarks and a wrap up. Todd Gleason | Chief Executive Officer: Thanks, Peter. So as Peter said, let's go ahead and wrap up with slide number 13, and then we'll welcome the Q&A session. As we enter the second half of 2025, we believe SQL remains very well positioned to benefit from our diverse and market exposure and key mega themes that remain very, very strong. Our $5.5 billion or higher pipeline provides tremendous visibility into many exciting opportunities, large and small. And we look forward to continuing to maintain a strong bookings level. I am very pleased with our Q2 and year-to-date performance. Records almost across the board. It speaks for itself. But to have 76% backlog growth, 95% orders growth, and revenue and adjusted EBITDA up 35% and 45% respectively is just outstanding. As always, I want to thank Team SECO, for your customer-first dedication and outstanding teamwork. We continue to be bullish with respect to our four-year outlook, and we are pleased with the progress we are making on the integrations of the 2025 acquisition of Profire Energy and the acquisitions we made late last year with Verantis Environmental and WK Group. We also continue to see opportunities to generate additional synergies with those acquisitions as well as the access that they each provide to new vertical markets and geographies. So with that, we'll pause, open up the line for questions, and then I'll wrap up with some closing remarks. Operator? Operator | Conference Operator: Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 1-1 on your telephone. If your question has been answered and you wish to move yourself from the queue, please press star 1-1 again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Rob Brown with Lake Street Capital Markets. Your line is open. Rob Brown | Analyst, Lake Street Capital Markets: Good morning, and congratulations on a great quarter. Todd Gleason | Chief Executive Officer: Thanks, Rob. Morning. Rob Brown | Analyst, Lake Street Capital Markets: First question is on the pipeline and the PowerGen market. You've had some good orders there. How would you say the pipeline is sort of for the rest of the year and into next year in PowerGen? What are the size of the opportunities and, you know, how much capacity do you have there to take on work? Todd Gleason | Chief Executive Officer: Well, that's a good question. There's a couple questions in that. So capacity isn't an issue. We certainly – it speaks to our – need as we've been addressing it to bring on key resources to manage projects and supply chain relationships and obviously be able to execute on the project from a manufacturing or supply chain capacity. We feel good. The market continues to be excellent. Our order in the quarter and orders that we've had in previous quarters that are also very attractive. We would say we're in the Seco continues to feel that we're in somewhat of the earlier endings of our orders being booked. So you think about a large let's say gas turbine power job that might be announced by one of the large system providers in the marketplace, such as Siemens and GE, Vernova, et cetera. We're later in that cycle, meaning they then work with their supply chain, of which we're a strategic partner, to finalize the overall project, you know, design and system. So we would say our pipeline is still in the earlier innings as it reflects the very large announcements that have been made for power generation. So pipeline looks great. Certainly well over a billion dollars of power gen related projects for our solutions. And Peter, I don't know if you want to add any additional color to that. Peter Johansen | Chief Financial Officer: The active pipeline is well over a billion. We see that billion coming to a decision in the next 24 months. You know, that's across the large suppliers and some smaller end users who are going to self-perform work. We don't and have not seen any signs of this market slowing down. Todd Gleason | Chief Executive Officer: And I would say to just double down on the capacity question, you know, we are in regular dialogue. with the uh with our end customer uh sort of the aforementioned power gen suppliers and you know they're very uh they're very um keen on the capacity of the supply chain so you know they uh they work closely with all of us to ensure that whether or not somebody's supplying them with let's say uh thermal abatement uh or noise abatement thermal acoustic solutions or emissions management solutions, whether it's for an aero derivative or a large frame system, that we're not running into capacity issues to deliver. Operator | Conference Operator: Okay, great. Thank you. Rob Brown | Analyst, Lake Street Capital Markets: And then I guess beyond the PowerGen market, I think you talked about quite a bit of strength overall across the board, but I guess what's sort of the environment around some of the other verticals you're tracking? What are the drivers there? And what do you kind of see the length of the demand curve in those markets? Todd Gleason | Chief Executive Officer: Yeah. Peter will expand on each of these. There's multiple markets. Semiconductor has had some increases, and then it sort of settles back down over the last 18 or 24 months. But semiconductor certainly looks – and new fabrication capacity is back on in terms of a market, we would say, over the last six to nine months, certainly. Natural gas infrastructure has been a very, very high-growth market, and we've benefited significantly from our leadership position providing separation and filtration solutions and other key environmental solutions for natural gas infrastructure. And then, you know, we've invested heavily over the last few years to better position Seco and our key brands in industrial water, not only including on-site solutions but infrastructure associated with water. So that market continues to be very attractive for us. The market's healthy, but we feel that we're uniquely positioned now to – to break into some new geographies and new markets because of our investments and our relationships and even some of the acquisitions we've made, which give us access to those markets strategically. And then the last is, you know, a theme that, Rob, we've talked about for many, many quarters, continues to be very healthy. And that's just the general dynamic of industrial reshoring in North America and in other geographies where globally, I think over the last few years, countries and regions have wanted to have a better control over their supply chain capabilities. And so bringing back industrial production to, let's say, North America is one great example, which that thing continues to have really good visibility for us and some really good momentum still. So a lot there that we're excited about. Power gen is certainly the biggest associated with data centers and AI and, you know, and all the, you know, electrification and digitization needs and automation. So power gen is certainly the, I'd say the healthiest or the fastest growing of the markets. But the other ones I mentioned are, they're A plus in our book. Operator | Conference Operator: Great. Thank you. I'll turn it over. Thanks, Rob. One moment for our next question. Operator | Conference Operator: Our next question comes from Aaron Spachala with Craig Howland Capital Group. Your line is open. Aaron Spachala | Analyst, Craig Howland Capital Group: Yeah, good morning, Todd and Peter. Thanks for taking the questions. You know, maybe first, just to expand on Rob's question maybe a little bit, I think you talked about some similar sized opportunities in the industrial market. Just curious, you know, which parts of those end markets, geographies, et cetera, you know, might that be in? And just, you know, is that something you expect this year? Is that more into 2026? Unknown: Thanks, Aaron. Good morning. Peter Johansen | Chief Financial Officer: We have more than a handful, less than a dozen, large opportunities in water in the Middle East, India, and Southeast Asia that are in excess of $50 million that we're actively pursuing and are proceeding well up to an award. It's the greatest number we've seen at any time in our history, and it's mirroring what's happening in... power generation. We're seeing a return to the buying cycle now of a number of industrial end markets, including the next wave of semiconductor and electronic plant construction, beverage can plant manufacturing, build-outs, and a new wave in metals processing. Not your traditional steel, aluminum, titanium, nickel that we've historically served, but as the U.S. and other non-Asian markets begin to invest in securing supplies around rare earths, copper, and other materials, that's beginning to enter, you know, I call it an order window in a year or two from now. A lot of activity. What's also benefiting us and many of our peers is the current administration's view on freeing up the bureaucratic red tape to allow projects to be permitted and financed quickly and get started quickly. Shovels are getting in the ground faster now, and we expect that to accelerate as well. So there's just a lot of very positive tailwinds, if you will, that we're experiencing. And as you see demand for manufacturing grow in the United States, whatever form that might be, it's going to require energy. It's going to require logistics and transportation. And those investments then require materials to produce them, which will get produced in quarries and in cement plants and other areas where we supply equipment. So it seems to be a very, you know, now a very, I dare use the term, you know, kind of mega cycle. around all things that require industrial performance, and that's where we're focused. Aaron Spachala | Analyst, Craig Howland Capital Group: Oh, great, Peter. Thanks for the color. And then maybe on that, some of the red tape, can you just kind of talk about the big, beautiful bill and any impacts on the bonus depreciation as some of these projects maybe start to get moving? I mean, you've seen really good order growth thus far. Is that something that can help move some of these projects forward as well and benefit you? Peter Johansen | Chief Financial Officer: It can't hurt. Yeah, it can't hurt, but we were seeing our orders grow, our opportunity pipeline grow, and our booking rates grow even before the passage of the bill. Even while it was being debated, we were receiving orders. No one held off waiting for the results. Aerospace is going to benefit. Anyone who buys or builds large pieces of machinery is going to benefit, so it can't hurt. One thing we haven't talked about, and it just was announced in recent days, is what's likely to be a very large export wave from the U.S. in munitions, armaments, and defense equipment. That'll start rolling through our economy. New plants have to be built. New sources of raw materials have to be developed. Yeah. And so anytime government steps back and says we're going to do the minimum to enable industry, to enable the markets to do their job, that's a good thing. And while we're not taking a political position here, we're certainly not opposed to that. Todd Gleason | Chief Executive Officer: We're not sure, to Peter's point, that there's any specifics with any bill either way that slows down the need for power, that impacts the need for more automation and new industrial investment. These things are going to happen sort of with or without policy. We do believe policies certainly help to open up the speed and acceleration of which things happen. But I think we're more excited and interested in our big, beautiful backlog than we are in any particular bills. Aaron Spachala | Analyst, Craig Howland Capital Group: Right. Good. Thanks for taking the questions. I'll turn it over. Operator | Conference Operator: One moment for our next question. Our next question comes from Jim with Needham & Company. Your line is open. Jim | Analyst, Needham & Company: Hi, thanks. Good morning. Just if we look at your guidance for second half bookings, I'm just wondering, what does that imply for large orders? I know that's always tougher to predict the timing on some of these. Todd Gleason | Chief Executive Officer: It doesn't – yeah, thanks. It's a great question. I would say it is – it doesn't capture the maximal of what we could book in the second half. I'm not suggesting that we're being uber conservative in our bookings outlook for the second half, but we're certainly not going to, you know, we're not batting a thousand here on all these things happening in the second half. So, you know, I think we take a very normalized view of how and when the timing of these orders come in. We would say, you know, you know, that, yeah, that, you know, it's slightly less than maybe the last couple quarters, but still at a healthy level in terms of the gross dollar amount. That could prove to be, you know, one way or another. And as you know from our history, an order can miss booking the quarter by a handful of days or weeks, and then it might end up in the next quarter. So we don't know always when our customers are going to finalize the purchase order agreements with us. Jim | Analyst, Needham & Company: Got it. And I wanted to go back to the comment you made in the release, and I think in the deck about the inflationary pressures. in the second half. I guess the question I have for you, Todd or Peter, is what flexibility do you have to pass on some of this to the market over time? Or is this also about some of the larger deals and sometimes it's a little bit more challenging to do that? Todd Gleason | Chief Executive Officer: Yeah, maybe it's a little more challenging to pass through on some of the larger projects. You know, we have very good contracts, and we have very good execution with our supply chain. When we have a fixed price contract with a customer, we have similarly fixed price contracts with our supply chain. But you can't – pre-buy or fix everything. And I've said it on the first quarter call when we articulated our view of tariffs and inflation. And we're just reiterating it again, I guess, now. And that is if most companies are increasing price, which we feel that most have in the industrial space, components, electrical components, pumps, motors, valves, fans, you name it, things we all buy that might not necessarily be negotiated in our supply chain. We're still buying those, if you will, through distribution as and when we need them. If those prices are up 5, 6, 7, 8%, you know, I'm just using that as an example. Well, that's inflation that we know is coming in the second half. And we're just suggesting that we've modeled that into our guidance. That expectation that the prices that we've heard and understood have been increased throughout the year, that will start to present itself through distribution now in the third quarter and in the fourth. The combination of that expected inflation, which we certainly work hard to pass along or absorb in our productivity initiatives, and I feel good about our ability to do that, but still it's an expected inflationary period for a handful of our businesses that are out buying components like that. And then the other is inflation. You know, when you have the backlog of 300-ish million, not quite, but almost $300 million year over year, and we expect that that could continue to grow, you know, we're adding a handful of resources to prepare for that execution to manage our ability to deliver on time, on schedule, and even better than budget. So these investments are smart. We get out ahead of it. We get out ahead of, you know, the need to scramble on our projects. But as a result, we're sometimes adding a little bit of cost in advance of that revenue. That is a dynamic that we see potentially in the second half. So our guidance really reflects the combination of those two components. Jim | Analyst, Needham & Company: Got it. And just last question, quick one, just on, has your thinking about the impact of tariffs on the business changed at all? Todd Gleason | Chief Executive Officer: No. Jim | Analyst, Needham & Company: And congrats on the quarter, by the way. Todd Gleason | Chief Executive Officer: Okay. Oh, thanks. Yeah, no, our thinking remains fundamentally unchanged. It's a, you know, continues to be a bit of an evolving headline and topic as policies and relationships and agreements change. But, you know, we believe overall that what we talked about at the first quarter and the analytics that we provided fundamentally hold true still. Operator | Conference Operator: Thank you. Unknown: Thanks. Operator | Conference Operator: One moment for our next question. Operator | Conference Operator: Our next question comes from Jerry Sweeney with Roth Capital. Your line is open. Jerry Sweeney | Analyst, Roth Capital: Good morning, guys. Thanks for taking my call, and congrats on a great quarter. Unknown: Thank you, Jerry. Jerry Sweeney | Analyst, Roth Capital: A lot of questions have been asked, and to be honest with you, I'm multitasking here, but just wanted to touch again on margins. These are my words. I think aspirationally, or I should say, you know, I would always think SECO could get it to sort of mid-teens EBITDA margins. We have FJ&A moves, process improvements. I think there's mix. There's also leverage as you continue to drive gross profit dollars. Is something in the mid-teens obtainable over 12, 18, 24 months, and how should we think of that? Todd Gleason | Chief Executive Officer: Yeah, I mean, look, we got to get into the low teens sustainably before we get into the mid teens. So we want to we want to get there. We expect to get there in that period. Mid teens, certainly, I think, you know, we are, you know, I would maybe suggest we've been. pleasantly surprised with the growth and the opportunities in the marketplace. When we see that we want to invest to penetrate those markets and continue to build our industrial water business, for example, continue to build our capabilities internationally, continue to build our you know, our pipeline of not only sales, but great talent to go and execute on that. So, you know, our investments have probably been a little bit higher than we anticipated 12, 18 months ago, but so has our growth rate, right? So we're driving that. And, you know, I would say we're maybe, if you told me we had to have mid-teens margins we, you know, to whatever, to win gold medal, then, you know, I suppose we certainly see a plan to get there. However, we like the investments, what they're yielding. We believe in the returns over the long term. And so, yes, it might be your words. It's also mine, Jerry, that as we continue to grow, we believe that volume leverage and productivity will get us to those mid-teen EBITDA margins. We're still committed to them. We're probably, you know, a little, like I said, a little bit behind in terms of how we thought we'd be because of our investment cycle. But we also like the returns we're getting from our investment. So we're still committed to those mid-teens margins, and we'll get there. Jerry Sweeney | Analyst, Roth Capital: I get it, and that's fair, right? So what we should be thinking here is, right, this is how growth is. Again, maybe a little bit ahead of schedule. Have to invest in that. I would take growth over, you know, margin tweaking any day of the week. And, you know, it's a little bit of tactical response to support growth that, you know, maybe slows margin expansion a little bit. But, again, let's go for growth over, you know, absolute margins any day of the week. Is that fair? Todd Gleason | Chief Executive Officer: That's right. That's right. And I mean, you know, this sounds convenient to say when you're in a high growth organization. But if we did see moderating growth as a company, we have certainly cost levers that we wouldn't be afraid and could take to probably. And I have many experiences, as does my leadership team and our board. kind of working in for decades and lower growth organizations that as a result of that lower growth environments, low single digit growth companies really, really go after their cost structure more aggressively because they don't have necessarily or see the opportunities to invest in, you know, in 95% orders growth year over year, right? And so it's a balance that we feel we're willing, it's a trade-off, I guess, that we feel we're willing to make to continue to invest appropriately to maximize our growth versus slowing down that investment to maximize our margins. Now, we're not trying to have weak margins. We love what we're doing with gross margins, price, productivity, mix. We're going to continue to work on our portfolio. And as we said, the second quarter shows a stronger conversion of our SEG&A. We're still committed to that. We're still looking at costs to prune in our corporate and in our organization where we have redundancies. There's no shortage of levers here. But right now, the focus is on growth. Jerry Sweeney | Analyst, Roth Capital: One other maybe housekeeping – or one or two other housekeeping items. Any forex impact in the quarter or – I didn't go through it with a fine tooth, to be quite honest with you. Todd Gleason | Chief Executive Officer: De minimis. It's small. De minimis. Small forex. Jerry Sweeney | Analyst, Roth Capital: Yeah. And then – Curiosity is an occupational hazard of an analyst. What is the gap between maybe Siemens, GE, Venova, you know, getting an order for a turbine and when you see the follow-on order for your equipment or your portion of the project? Todd Gleason | Chief Executive Officer: Half a year. Half a year would be – so typically we and the balance of the supply chain are certainly – deeply involved in conversations with them, including even some preliminary budgetary proposals, et cetera, to give them confidence who they would already have as a short list of suppliers, what the cost on a project would look like. So that helps them secure and have confidence in their ability to deliver on their order. So in a way, it feels like we're right there with them. many times, but from when they announce, let's say, a large win, we're six to 12 months away from securing a PL. Now, sometimes they announce a win and they say that this is five years out. Well, then we're longer than that because they're not going to necessarily have to give us an order for something that we can certainly deliver in 12 months. They don't need us to sit on it for four years. But for the most part, they're announcing orders that they're planning to deliver. And in that 18 to 20 to 36 months, we'll announce an order or we'll get an order six to 12 months after their announcement. Just to be, that's the typical. Jerry Sweeney | Analyst, Roth Capital: Got it. Understood. All right. I really appreciate it. Congrats again on a great quarter. And thanks for taking my call. Operator | Conference Operator: Thanks, Jared. One moment for our next question. Our next question comes from Bobby Brooks with Northland Capital Markets. Your line is open. Hey, good morning, guys, and congrats on that same quarter. Bobby Brooks | Analyst, Northland Capital Markets: About a month ago, you guys had announced the launch of a new Saudi Arabian office, which is in contrast to the fact most investors... Bobby, it's very hard to hear you. Todd Gleason | Chief Executive Officer: Your line is very staticky. Yeah, we can hear you, but just so you know, your line's a little staticky. But go ahead. Bobby Brooks | Analyst, Northland Capital Markets: Yeah, you guys can hear me better now? Todd Gleason | Chief Executive Officer: Go ahead. Bobby Brooks | Analyst, Northland Capital Markets: Yeah, so, yeah, just about a month ago, you guys announced the launch of a new Saudi Arabian office, which is in contrast to the fact that most investors focus on the domestic opportunities ahead for you guys, given how large it is. But I think it would be helpful for investors to discuss the opportunities you're seeing globally, kind of the key reasons you mentioned in the Q&A a little bit earlier, and just maybe contrast that versus domestic opportunities. Because I get the sense that the international opportunity for SECO is a little underappreciated. And maybe you can just dovetail that with how selling pro-fire solutions to international customers has went thus far. Todd Gleason | Chief Executive Officer: Yeah. So, you know, look, we love all of our regions. And, you know, certainly we see key opportunities in North America. But we've also been growing steadily over the last four years internationally. In fact, our high growth regions, which is which are the countries or the regions that you would expect, you know, from the Middle East and India, Southeast and East Asia, China. and similar, we have expanded our sales over the last four years from around $30 million to well over $100 million. And the Middle East represents a very strategic region for us. We have a great group headquartered in the Middle East and Dubai that thoughtfully expands into new vertical markets like industrial water, as well as into new geographies throughout not just the Middle East, but those high growth regions. We've been intentional about expanding into Southeast Asia and growing in that space. We've been intentional, including an acquisition of DS21 in South Korea so that we have better and more sustainable access to the East Asian market and the South Korean relationships with the EPC firms there. And then you sling back to the Middle East. We have, you know, certainly sold into Saudi and worked with the major Saudi companies and the economic leaders there. It's more efficient if you have a local presence. And over time, as we think about investing, you know, in Saudi and in other countries, we want to make sure that we're able to maximize those relationships. So having, you know, having a local presence, having a local team, having a local office, an entity, over time potentially adding assembly, manufacturing, and more distribution into a country aids and helps accelerate the growth in those relationships as well, especially in a country like Saudi that's It's certainly very appropriately focused on Saudi for Saudi and things of that nature. So you want to crawl, walk, run into these countries. I think we do a good job of that, and we're going to do that same thing in countries like Saudi where we see a long-term growth rate and opportunities that aligns with our products. Peter Johansen | Chief Financial Officer: Bobby, a way to think about it is that we've positioned our global footprint to be in the eight largest industrial trading zones in the world. We talk a lot about North America because SECO was at 1.56 years ago, 80 plus percent North American in its businesses. We're rapidly approaching a balance 50% North America, 50% outside of the region. And that'll vary by quarter and it'll vary by year based on orders booked and revenue generated from those orders. But we see consistent market growth in Korea, in Southeast Asia, India, Saudi Arabia, or the Gulf region, and North Africa. And we see that business being generated through clients based in Europe investing outside of Europe. EPCs that are historically European headquartered with teams now in India and the Middle East and Southeast Asia, developing projects for large local end users and national energy companies. We're also seeing a more attractive market for our solutions as these regions begin to spend more time thinking about environmentally sustainable outcomes, cleaner plants, cleaner energy production, cleaner water, reuse of water. And so the dynamics or say the market drivers we've seen in the OECD nations have now made their way into what euphemistically we refer to as the developing regions. I would argue they're not developing regions, they're developed markets that are now developing their view on environmental solutions on how to deliver more environmentally sustainable solutions and to be more efficient in their consumption and use of material inputs. That all favors SECO. And we're making investments in those locations judiciously as we feel those markets are opening and available for our solutions. Because a domestic solution, one that's very viable and is the standard in the U.S. is not yet the standard outside of the U.S. in many markets, but we're moving towards a reality by the end of 2030 where what we're supplying in the U.S. will look very similar to what we're supplying in Saudi Arabia, for instance, in India, in Malaysia, in Indonesia. And that's a good thing, good for us, good for the planet, good for the people who live in those regions. Bobby Brooks | Analyst, Northland Capital Markets: That's excellent, Carla. I really appreciate it. And then my next question is, in the prepared remarks, you guys both indicated that the project delays that kind of hampered results in 2024 have abated. Could you maybe just discuss a little bit deeper why those have relieved? Peter Johansen | Chief Financial Officer: Yes, our customers got their SHI blank blank together, and now we're moving forward constructively to deliver on the projects as we had initially defined them? Todd Gleason | Chief Executive Officer: Yeah, we had a handful of larger projects that had longer delays than normal in the few years prior to 24. That was in 24. We may have even seen customers that were accelerating projects. So the dynamic in 22 and 23 where when projects were booked, customers executed at or maybe even a little faster than schedule on average, That changed certainly across a handful of material projects in 24, and that impacted our outlook for the year as well as our performance in the year because they were larger than average projects that had longer than average delays. Those projects have now turned to a normalized operational schedule. They got their stuff together, and we have not seen that same dynamic change. You know, there's always a handful of projects that are paused for a variety of reasons. That happens every quarter and every year that I've been at Seco and pretty much every company I've ever been at. But that dynamic was unique last year. And we're no longer seeing that unique aspect this year. It's now, quote, unquote, back to normal, Bobby. And so we, right now, we don't see a project paused. that we anticipate being delayed, nor do we necessarily see such large projects in the second half of the year that even if one or two of them were delayed would necessarily create a moment of pause or concern for us. The breadth of our projects is certainly pretty spread out. across our second half delivery. So right now we feel like we're in a pretty good shape. And that's why in our prepared remarks we make comment around we don't anticipate any project impact necessarily hurting us in the second half of the year. And we're certainly not experiencing anything positive or negative on the project execution dynamic to speak of. Operator | Conference Operator: Fair enough. Appreciate the call, guys. Bobby Brooks | Analyst, Northland Capital Markets: Again, Craig, congrats on a quarter hour turn of the queue. Unknown: Thank you. Operator | Conference Operator: And I'm not showing any further questions at this time. I'd like to turn the call back over to Todd for any closing remarks. Todd Gleason | Chief Executive Officer: Thank you very much. Well, thanks for the great questions and, of course, all the interest in our information today. Once again, I want to thank our global teams here at Seco for delivering such incredible value to our customers as we continue to protect people, protect the environment, and protect our customers' investment in their industrial equipment. As many of you know, we'll be presenting at several upcoming conferences in the third quarter, which you can find on our website, or we will be announcing via press releases. We hope to see you there. We're always available to answer any questions you might have. So with that, I want to thank everyone. Have a great rest of your day, and we'll talk to you soon. Operator | Conference Operator: Thank you, ladies and gentlemen. That concludes today's presentation. You may now disconnect and have a wonderful day. jsPDF 3.0.3 D:20260606090039-00'00'