Executives from CECO Environmental (NASDAQ:CECO) and Thermon discussed the rationale behind their recently announced combination during a conference fireside chat hosted by Roth Capital Partners analyst Gerry Sweeney. CECO CEO Todd Gleason and Thermon executive Bruce Thames described the deal as a strategic pairing of two businesses with existing momentum, complementary end-market exposure, and opportunities for commercial and operational pull-through.
Why the companies chose to combine
Gleason said CECO and Thermon had monitored each other for years, noting that both serve heavy industry with engineered solutions tied to process management and environmental needs. He said the initial outreach to Thermon was not framed as a transaction, but as an effort to better understand what Thermon was doing in the market and explore areas where the companies “might wanna work together.” Those discussions ultimately led to the conclusion that combining the businesses would be the best path.
Thames echoed the “mutual respect” theme and said the companies had been connected since shortly after Gleason became CEO of CECO. He pointed to CECO’s repositioning efforts—specifically mentioning expansion into water globally and opportunities in power—as areas Thermon viewed as attractive. From Thermon’s perspective, Thames said CECO’s footprint in Korea and China could accelerate Thermon’s efforts to build manufacturing capabilities in those markets, an initiative Thermon had previously considered pursuing through acquisition or building new capacity.
Commercial synergies: controls, power projects, and OEM relationships
Both executives highlighted commercial opportunities that were not available prior to the transaction announcement because the teams could not coordinate. Gleason said one early driver of renewed conversations in 2025 was Thermon’s investment in its controls platform—“Genesis”—which CECO viewed as relevant to its own interest in controls, monitoring, and connectivity across platforms. He said the combination gives CECO a foundation to learn from and potentially expand an enhanced suite of offerings for customers, including in air and water applications.
Gleason also emphasized power as a major source of potential pull-through. He said CECO is winning “very large multi-hundred million dollar power jobs” and argued that those projects involve numerous applications—such as heat tracing, heaters, and related components—where Thermon products could be integrated rather than sourced externally. He said CECO has “millions of dollars of commercial opportunities” on projects in its backlog and pipeline, and cited a $6.5 billion sales pipeline, noting that CECO’s long-cycle project mix provides visibility into customer requirements over the next two years.
Thames added examples he described as “low-hanging fruit” already occurring in the weeks following the announcement, including Thermon bidding immersion heaters for fuel conditioning systems tied to large turbines. He also said Thermon historically gets “little to no business” from Siemens and GE, and described the potential to expand through CECO’s relationships with OEMs. Thames also referenced opportunities around continuous emissions monitoring systems (CEMS), describing Thermon’s tubing bundle line as being “all around” CEMS applications.
Thermon’s shifting revenue mix and “3D” strategy
Thames said Thermon is often viewed through the lens of its historical exposure to oil and gas, but argued the company’s mix has changed significantly. He said that when he joined Thermon 11 years ago, about 65% of revenue was tied to oil and gas, with a substantial portion linked to upstream activity in the Canadian oil sands and Russia. He said that today oil and gas represents about 28%–30% of revenue, with only about 2% tied to upstream CapEx, and that the remainder is more downstream and recurring.
He said the business has shifted from roughly 45% CapEx / 55% OpEx historically to about 83% OpEx recurring revenue tied to an installed base. He attributed the company’s evolution to a strategy he described as “3D”—Decarbonization, Digitalization, and Diversification—and said more than 70% of Thermon revenue is now outside oil and gas, spanning a broad set of end markets including general industrial, chemical and petrochemical, power, commercial, food and beverage, rail and transit, semiconductors, and pharmaceuticals.
Thames also discussed new product launches tied to electrification trends, including medium-voltage offerings designed for large bulk heating in industrial applications and liquid load banks targeting data centers. He said these two offerings could support 5%–7% growth, and noted that Thermon’s engineering backlog is at a record high. He also said customer CapEx spending was up 26% this year and that Thermon sees the trend continuing for the next 3–5 years, adding that the company expects double-digit growth for what would be its fiscal 2027 and beyond.
CECO’s view on power demand and bookings momentum
Gleason described gas turbine power as a “boom industry” and said demand is shifting toward larger frame turbine units and large-scale campuses—areas where he said CECO tends to “win more.” He said only “two or three” suppliers can provide the full suite of emissions solutions at that scale, framing CECO as positioned to benefit as the market moves toward these larger projects.
He noted CECO recently raised its bookings outlook, saying the company began the year expecting greater than $1.2 billion in bookings and increased that outlook to greater than $1.5 billion. Gleason added that power-related demand is “ramping higher, not lower,” and pushed back on the notion that the Thermon transaction signaled a pivot away from power.
Capital allocation and investor perception after the announcement
On M&A, Gleason said the first priority is executing a successful integration while continuing to fund organic growth opportunities. He said the combined company expects to start with a “very healthy balance sheet,” citing leverage of about 2.5 at the combination. He added that management expects the integration to be manageable, citing cultural alignment and geographic overlap, and said Thermon will remain intact as CECO’s largest strategic business group.
In response to an audience question on what the market may not have fully appreciated, Gleason said there was initial confusion around the financial structure of the deal and how much leverage it would create, contrasting it with other highly levered combinations investors have seen. He also noted the announcement coincided with broader equity market volatility tied to geopolitical headlines, which he suggested temporarily overshadowed the transaction’s fundamentals. Gleason said he believes investors will increasingly recognize what the combination can unlock “on day one” and over the longer term.
About CECO Environmental (NASDAQ:CECO)
CECO Environmental Corp. (NASDAQ: CECO) is a global technology provider specializing in engineered solutions that help industrial and commercial customers manage air emissions, process fluids and optimize energy use. The company develops custom-engineered systems and modular packages designed to meet evolving environmental regulations and improve operational efficiency across diverse production processes.
CECO’s core offerings include air pollution control equipment—such as scrubbers, cyclones, fabric and cartridge filters—and industrial process filtration systems for applications ranging from particulate removal to oil-water separation.
