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CECO's Industrial Process Solutions Unit Gains Momentum: Can It Sustain?
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Key Takeaways
CECO's IPS revenues rose 8.4% year over year to $61.7 million, accounting for 21.6% of quarterly revenues.
IPS orders surged 81% year over year to $90.3 million, including 157% organic growth for CECO.
CECO exited the second quarter with a $1.82 billion backlog, up 129.4% from 2025-end, boosting visibility.
CECO Environmental Corp. (CECO - Free Report) is benefiting from solid momentum in its Industrial Process Solutions (IPS) segment. In second-quarter 2026, revenues from the segment increased 8.4% year over year to $61.7 million, which accounted for 21.6% of its quarterly revenues. The surge in revenues was driven by strong project execution on semiconductor and industrial ducting backlog.
CECO continues to experience healthy orders for scrubber technologies in semiconductor and international end markets. The IPS segment’s orders totaled $90.3 million in the second quarter, reflecting growth of 81% year over year, which included organic growth of 157%. This, along with persistent strength in CECO’s Engineered Systems segment, has led to a strong overall backlog, which was $1.82 billion (up 129.4% from 2025-end) while exiting second-quarter 2026.
CECO’s backlog comprises a balanced mix of fixed-price contracts recognized on a cost-to-cost basis. The company’s projects related to the industrial process solutions business add diversification and support cash flow. Continued expansion in power generation, gas infrastructure, industrial and semiconductor activity gives CECO stronger revenue visibility for the coming quarters.
Reflecting solid business performance, CECO increased the lower end of its 2026 revenue outlook, currently expecting $1.300-$1.375 billion compared with the previous $1.275-$1.375 billion range. Adjusted EBITDA is anticipated to reach $200-$225 million, while free cash flow conversion is expected to be a minimum of 55% of adjusted EBITDA.
Segment Snapshot of CECO’s Peers
Donaldson Company (DCI - Free Report) is benefiting from strength in the Mobile Solutions segment, supported by solid demand in the aftermarket and on-road businesses. In the fourth quarter of fiscal 2026 (ended July 31, 2026), sales from Donaldson’s Mobile Solutions segment increased 7.9% year over year, with aftermarket and on-road sales rising 9.4% and 8.7%, respectively.
Tetra Tech Inc. (TTEK - Free Report) continues to benefit from multi-year investment in water, environmental and defense programs across its major regions. In the third quarter of fiscal 2026 (ended June 2026), net revenues from Tetra Tech’s Commercial/International Services Group increased 9.3% year over year, supported by water and digital automation-related projects.
The Zacks Rundown for CECO
Image Source: Zacks Investment Research
Shares of CECO have surged 23.1% in the year-to-date period against the industry’s 5% decline.
Image Source: Zacks Investment Research
From a valuation standpoint, CECO is trading at a forward price-to-earnings ratio of 23.84X, above the industry’s average of 19.80X. CECO carries a Value Score of D.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CECO’s 2026 earnings has surged 30% over the past 60 days.
View the Zacks #1 Rank List
Image: Bigstock
CECO's Industrial Process Solutions Unit Gains Momentum: Can It Sustain?
Key Takeaways
CECO Environmental Corp. (CECO - Free Report) is benefiting from solid momentum in its Industrial Process Solutions (IPS) segment. In second-quarter 2026, revenues from the segment increased 8.4% year over year to $61.7 million, which accounted for 21.6% of its quarterly revenues. The surge in revenues was driven by strong project execution on semiconductor and industrial ducting backlog.
CECO continues to experience healthy orders for scrubber technologies in semiconductor and international end markets. The IPS segment’s orders totaled $90.3 million in the second quarter, reflecting growth of 81% year over year, which included organic growth of 157%. This, along with persistent strength in CECO’s Engineered Systems segment, has led to a strong overall backlog, which was $1.82 billion (up 129.4% from 2025-end) while exiting second-quarter 2026.
CECO’s backlog comprises a balanced mix of fixed-price contracts recognized on a cost-to-cost basis. The company’s projects related to the industrial process solutions business add diversification and support cash flow. Continued expansion in power generation, gas infrastructure, industrial and semiconductor activity gives CECO stronger revenue visibility for the coming quarters.
Reflecting solid business performance, CECO increased the lower end of its 2026 revenue outlook, currently expecting $1.300-$1.375 billion compared with the previous $1.275-$1.375 billion range. Adjusted EBITDA is anticipated to reach $200-$225 million, while free cash flow conversion is expected to be a minimum of 55% of adjusted EBITDA.
Segment Snapshot of CECO’s Peers
Donaldson Company (DCI - Free Report) is benefiting from strength in the Mobile Solutions segment, supported by solid demand in the aftermarket and on-road businesses. In the fourth quarter of fiscal 2026 (ended July 31, 2026), sales from Donaldson’s Mobile Solutions segment increased 7.9% year over year, with aftermarket and on-road sales rising 9.4% and 8.7%, respectively.
Tetra Tech Inc. (TTEK - Free Report) continues to benefit from multi-year investment in water, environmental and defense programs across its major regions. In the third quarter of fiscal 2026 (ended June 2026), net revenues from Tetra Tech’s Commercial/International Services Group increased 9.3% year over year, supported by water and digital automation-related projects.
The Zacks Rundown for CECO
Image Source: Zacks Investment Research
Shares of CECO have surged 23.1% in the year-to-date period against the industry’s 5% decline.
Image Source: Zacks Investment Research
From a valuation standpoint, CECO is trading at a forward price-to-earnings ratio of 23.84X, above the industry’s average of 19.80X. CECO carries a Value Score of D.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CECO’s 2026 earnings has surged 30% over the past 60 days.
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.