CECO Environmental Corp. (CECO) Earnings Call Transcript & Summary

Hello, and thank you for standing by. My name is Glaiza, and I will be your conference operator today. At this time, I would like to welcome everyone to CECO Environmental Second Quarter 2026 Earnings Call. [Operator Instructions] I would now like to turn the call over to Marcio Pinto, Vice President of Corporate Integration and Investor Relations. Please go ahead.

Thank you, Glaiza, and thank you for joining us on the CECO Environmental Second Quarter 2026 Earnings Call. On the call with me today are Todd Gleason, Chairman and Chief Executive Officer; and Peter Johansson, Chief Financial Officer. Our second quarter reported results include one full month of Thermon financial performance, following the June 1 closing of the acquisition. Where appropriate today, we will distinguish between reported results and pro forma information. This will also be addressed in our full year consolidated outlook by Todd. As a reminder, this quarter's webcast, earnings release and presentation, which include relevant disclosures and non-GAAP reconciliations, are available on our website at www.cecoenviro.com. Today's discussion includes forward-looking statements that are subject to risks and uncertainties, including those described in our SEC filings and in the legal disclosures included in today's presentation. 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.

Thanks, Marcio, and good day, everyone. Before we begin, I want to thank Team CECO, including our new Thermon colleagues, for delivering tremendous value to our customers and our teams, which has enabled us to deliver outstanding quarter. Let's review our Q2 performance, integration activities, our full year outlook and our view of markets and opportunities. Please turn to Slide #3. Simply put, this was a record-setting quarter across the board. We delivered record orders of $799 million. Our quarter ending backlog is over $1.8 billion. We generated revenue of $285 million and our adjusted EBITDA of approximately $40 million. Our reported revenue increased 54% year-over-year with continued strong double-digit organic revenue growth. Adjusted EBITDA increased 73% and margins expanded approximately 150 basis points to 14.1%, marking CECO's first quarter with mid-teen EBITDA margins. We expect EBITDA margins to rise in coming quarters with the full positive impact of Thermon, our integration synergies and ongoing double-digit top line growth. Additionally, we expect this high performance growth and profitability to be largely sustainable. Our sales pipeline now exceeds $8.5 billion. Our trailing 12-month book-to-bill is over 2, and we remain bullish on the order environment as we enter the second half. We have delivered double-digit revenue and earnings growth for many quarters in a row. And with our year-to-date bookings, we have high confidence and visibility that this trend will continue into the foreseeable future. The Thermon integration is well underway and going extremely well. Culturally, it is a great fit. While work remains, we continue to advance the integration program and have a solid start on our synergies. We have already captured approximately $13 million of annualized EBITDA savings in just the first 60 days and have identified early commercial wins across the combined portfolio. I and Marcio Pinto, who is leading our integration program, will give additional color on this in a minute. And given our strong first half execution, record backlog and accelerating order momentum, we are raising our full year consolidated 2026 outlook. I will come back to guidance towards the end of the call. Now please turn to Slide #4. This slide provides a good illustration of the consistent high performance growth engine we have built. Our sales pipeline has expanded from approximately $1.5 billion in 2021 to the more than $8.5 billion that I just mentioned. The strategic investments we made in markets, talent, solutions and commercial presence are translating directly into sustained strong order levels and growing backlog. First quarter 2026 orders, as shown on this slide, were $449 million, up 97% year-over-year. Second quarter orders further accelerated to $799 million, up 191% year-over-year. For the first half of 2026, we have booked approximately $1.25 billion of new orders, up approximately 150% versus the first half of last year, which had been a record set of quarters at the time. Our 2026 performance has driven backlog to more than $1.8 billion, up 164% over last year. And as I already mentioned, but it is worth repeating, our trailing 12-month book-to-bill is over 2. We continue to see strong demand and customer activity across a broad range of end markets globally, including power generation, semiconductor and electronics, natural gas processing and infrastructure, industrial water and industrial reshoring-related projects, and with the addition of the thermal solutions to the portfolio, exciting opportunities within data centers. The power generation opportunity remains particularly robust. But what gives us confidence is the breadth of the pipeline across our end markets and geographies. It is always good to remind everyone that our backlog is firm and supported by legally binding purchase orders and project commitments with permits already obtained by our customers. As we mentioned in the slide, these are not speculative opportunities or reservations for future projects, but instead ongoing programs. This backlog gives us substantial visibility to continued revenue growth. It is also increasing -- it also increasingly contains higher-margin projects that we have discussed over the past few quarters, which supports the expectation for continued margin expansion as we convert on this backlog. Marcio and I will now review some additional materials related to the Thermon integration, and then we will hand it over to Peter to cover additional insights on our financials. Marcio?

Thank you, Todd. Please turn to Slide 6. We closed the Thermon acquisition on June 1, and I am very pleased with the engagement our teams have demonstrated in the first 2 months as a combined company. All major work streams, spanning from corporate G&A to operations and commercial areas, are active, and the teams are moving quickly from planning into execution mode. Our integration management office has been established and our governance program is now in place to act as an accelerator of value creation. As a result, we are progressing ahead of our synergy expectations. As Todd mentioned in our opening chart, in the first 60 days, we have captured approximately $13 million of annualized net adjusted EBITDA savings, already representing roughly 1/3 of our $40 million target. These savings are driven primarily by public company cost reductions around head count, board and public company-related services as well as incremental actions across the organization, touching a number of sites and departments. We expect approximately $5 million of the annualized savings captured thus far to be realized in our 2026 adjusted EBITDA results and are also included in our current outlook. On a total cost synergy basis, we have captured about $19 million of annualized savings when added for stock compensation and other items that are generally not included in CECO's adjusted EBITDA. Also noted on the slide, we have incurred about $21 million of year-to-date costs to achieve these savings, primarily related to change in control provisions and accelerated equity vesting for former Thermon officers. Looking forward, we expect to have approximately $17 million to $20 million of annualized net adjusted EBITDA savings captured by year 1 of the transaction, which would represent about 45% to 50% of our total target as we continue to work towards the full opportunity set and deliver incremental value in all areas where the combined scale of CECO and Thermon creates opportunity. To conclude, after 60 days working with a talented team across multiple functions and geographies, the key takeaway is clear. The original target of $40 million in synergies remains firmly intact. And based on the current pace of execution, we have increasing confidence in our ability to deliver it. And with that, I'll turn it back to Todd to discuss the commercial side of the combination. Todd?

Thanks, Marcio. We have a very well-organized integration process, thanks to Marcio and our integration management office leaders and functional leaders. Thanks to each of them. Please turn to Slide #7. As we covered on our June 9 investor update call, which we held shortly after closing the acquisition of Thermon, we have a real opportunity to drive between 1 to 2 percentage points of additional organic growth across the Thermon portfolio solutions. Approximately 2 months later, I feel even stronger about that statement. The combination provides more scale, a broader portfolio of solutions and expanded international and customer footprint, additional product development and an expanded global sourcing network. CECO brings niche leadership positions in environmental solutions for power generation, industrial water, food processing, LNG and gas infrastructure, semiconductor, electronics production and materials processing markets. While Thermon has significant presence in midstream and downstream oil and gas, nuclear gas infrastructure and rail and transit for thermal management applications. The teams have already identified more than 100 commercial opportunities where we see an opportunity to bring the combined portfolio to customers, and we are already experiencing early wins. For example, more than $500,000 worth of Thermon solutions have already been incorporated into CECO power generation projects. When you consider that our power generation sales pipeline alone is measured in the billions of dollars, that opportunity to attach thermal solutions to CECO projects could become a very meaningful number over time. Our objective is to add several points of organic growth by maximizing these commercial opportunities. While it is still early, the level of engagement between commercial teams and the number of opportunities already identified reinforce our confidence in the commercial rationale for this combination. We'll now hand it over to Peter, who will go into more detail on our financial results. Peter?

Thank you, Todd. Good day, everyone. Thank you for joining Todd, Marcio and I for the CECO Second Quarter 2026 Earnings Call. Please turn now to Slide 9. In for more color on CECO's financial results for the second quarter. CECO followed up a good first quarter with a very good second quarter, continuing the momentum we have built over the last 5 quarters. We concluded the quarter with a record backlog of $1.82 billion, up 164% versus prior year and up 76% sequentially from our previous high said at the end of the first quarter, of $1.035 billion. Backlog has now increased for 12 consecutive quarters, accelerating over the last 7 quarters, each of which having delivered more than $200 million of orders. Second quarter orders were $799 million, a new company record, and an increase of 191% over the prior year period. We booked significant orders across a range of end markets, including power generation, LNG, semiconductor production and industrial water treatment. Our book-to-bill in the quarter was approximately 2.8, an outstanding result. On a trailing 12-month basis, our bookings reached $1.81 billion, a 105% increase over the prior trailing 12-month period, with a book-to-bill ratio of 2.0. After the first 2 quarters of 2026, bookings have exceeded the full year 2025 bookings by 17%, a healthy $184 million increase. Revenue in the second quarter was $285 million, an increase of 54% year-over-year, inclusive of Thermon's June 2026 results. CECO's stand-alone revenue was a company record at $235 million, approximately $20 million higher than the company's previous quarterly high in the final quarter of 2025. We expect revenue growth to accelerate in the second half of 2026, tracking the significant expansion of our backlog as project execution against recently booked projects exit the engineering phase. This is most notable in our portfolio of power generation projects. Trailing 12-month revenue of $903 million, a record for any 12-month period in company history, was up 38% or $247 million over the prior 12-month period, reflecting strong backlog conversion, which will only get better. We are confident that our sequential revenue growth will continue given our backlog position and demonstrated execution. Adjusted gross profit for the quarter and for the trailing 12 months increased 43% and 30%, respectively, on higher volume. Sequentially, margins increased 264 basis points to 33.7%, approximately in line with the company's expectations of adjusted gross profit margin performance noted in our Q1 earnings call. We expect margins to trend higher in the second half of 2026, with improving volume mix dynamics on larger projects, newer higher-margin projects with faster revenue recognition profiles, improving execution and operating excellence efforts and the benefits from blending of the Thermon margin profile. Our trailing 12-month gross profit margins were 33.2%. Now I'd like to talk about adjusted EBITDA, which was $40.2 million in the quarter, an increase of 73% versus prior year, delivering a margin of approximately 14.1%, a 154 basis point improvement over prior year and our first quarter with mid-teens EBITDA margins, a result we expect to consistently exceed in future periods. Over the trailing 12-month period, adjusted EBITDA was $113.4 million and a margin of 12.6%, representing an increase of nearly 180 basis points. A large part of the improvement came from lower operating expenses on increasing volumes, benefits from complexity reduction efforts, including those realized in our 80/20 efforts and lower corporate G&A spending. Please turn to Page 10 with me now, and we'll look more in depth at adjusted EBITDA and our margin trends. Adjusted EBITDA in the second quarter was $40.2 million, with the trailing 12-month period reaching $113.4 million, both company records. Margins in the quarter and trailing 12 months were 14.1% and 12.6%, respectively, also company records for the period. We have expanded TTM and full year EBITDA margin steadily since 2022, a trend that we expect to continue, and to reach and exceed a mid-teens adjusted EBITDA margin for stand-alone CECO and a high teens margin for the consolidated business. Our sales, engineering and G&A spending in the quarter was 22.4% of revenue, lower by approximately 400 basis points on a year-over-year basis. To solidify our margin improvement journey since the third quarter of 2025 through the current quarter, adjusted EBITDA margins have expanded on a year-over-year basis by 130 basis points, 190 basis points, 200 basis points and now 150 basis points in the recently concluded quarter. This is a very strong trend that I expect will continue for the remainder of 2026, which is supported by the resources of our newly formed business transformation office, our operating excellence teams, which are extending the deployment of our 80/20 program request more of CECO and will deliver additional sourcing and project execution benefits. In addition, the consolidated margin profile will also benefit in the third quarter and beyond from full quarters of Thermon revenue and income in the consolidated results. Please now turn to Page 11 for a quick look at how our backlog is trending. Backlog growth continues to accelerate on a sequential basis, with a book-to-bill in the quarter of approximately 2.8x, resulting in another record quarter ending backlog results. Book-to-bill for the first half of 2026 achieved 2.6x, and our strong backlog over the TTM basis was now -- book-to-bill is now 2.2. Backlog, which reflects future sales, has now increased approximately 8.5x since the end of 2021. This sustained orders performance and our continued success in converting our greater than $8.5 billion opportunity pipeline underpins our expectation of extending the trend of greater than 25% organic top line revenue growth for 2026. Orders in the quarter benefited from projects and strong momentum in natural gas power generation, semiconductor, water and gas infrastructure, and this trend has continued into the third quarter. Power generation related projects account for approximately 1/2 of our second quarter ending backlog, with approximately 25% coming from industrial air and water projects, and the remaining 25% of the backlog consisting of work in the natural gas and natural gas liquids infrastructure sector, hydrocarbon and chemical processing and other energy sector activities. Now please turn with me to Slide 12 for an update on cash flow and our current debt position. Second quarter adjusted free cash flow for CECO rebounded strongly after the first quarter's cash outflows. In the second quarter, we generated approximately $53 million of cash, a little over 132% of adjusted EBITDA. Year-to-date, the company delivered approximately $38 million of adjusted free cash flow, an increase of approximately $56 million year-over-year, representing 63% of adjusted EBITDA. On a trailing 12-month basis, cash flow as a percentage of EBITDA was approximately 58% above our 55% or greater target for the full year of 2026. The company generated strong collections activity in the quarter against the first quarter billings for large project milestones achieved in the period. Numerous large project milestones and subsequent billings were also realized in the second quarter, which will -- creating customer receivables that we expect to collect during the third quarter, extending our trend of improving cash flow generation. Supplier payments, offsetting customer collections, were also made during the quarter, which will continue into the third quarter as we accelerate the conversion of backlog into recognized progress and subsequent billings and payments. Capital expenditures in the quarter were modest and largely driven by our ongoing ERP migration and consolidation initiative, which we expect will be essentially completed for CECO entities in early 2027. Gross debt at the end of the second quarter increased by approximately $523 million since the 2025 year-end period as we utilized our delayed draw Term Loan A and our upsized revolver to finance the cash portion of the Thermon acquisition and related transaction costs. Year-to-date, use of our revolver for working capital is essentially flat. Net debt increased by $495 million as the quarter end cash balance grew by approximately $28 million since year-end, resulting in a quarter end leverage ratio of 2.7x our trailing 12-month bank EBITDA levels, near the high end of our previously communicated leverage range. The combination of Thermon and CECO's strong free cash flow generation allowed a substantial step down from closing date leverage, and strong cash flow generation has continued into the third quarter, allowing pay down of an additional $39.5 million, lowering our gross debt position to $692 million as of July 31, moving CECO ever closer to its targeted leverage range of 2.0 to 2.5x. Cash generation and improving our working capital position will continue to be a key area of focus for CECO as we continue to reduce our leverage and fund our growth. As of June 30, CECO had approximately $220 million in additional capacity to fund working capital, CapEx or M&A. And with further capacity built into our credit agreement for additional borrowings, we will be able to advance CECO's strategic growth, should additional funds be required. Overall, we are in a very comfortable position, 1-plus month after the Thermon acquisition, with sufficient capacity for our working capital and foreseeable investment needs. That concludes my review of CECO's second quarter financial results. I will now pass it back to Todd for a wrap up.

Thanks, Peter. Please turn to Slide #14. As I already mentioned, we are raising our full year outlook, 2 months after providing our most recent 2026 guidance for the year. Our strong first half performance, record backlog levels and accelerating order momentum provides visibility and confidence to base our numbers. We now expect full year revenue between $1.3 billion and $1.375 billion, increasing the low end of our prior range by $25 million. At the midpoint, this represents approximately 20% year-over-year growth on the reported basis reflected in our outlook. We are also raising the low end of our adjusted EBITDA outlook by $5 million and now expect between $200 million and $225 million for the full year. This outlook includes approximately $5 million of realized Thermon cost synergies in 2026, which was also in our previous outlook. We continue to expect mid-teens adjusted EBITDA margins and adjusted free cash flow conversion of at least 55% of adjusted EBITDA. On a pro forma calendar year basis, including Thermon for the full year, we estimate revenue of approximately $1.5 billion to $1.6 billion and adjusted EBITDA of approximately $255 million to $280 million. We also continue to expect full year orders to easily exceed $2 billion. The second half should benefit from accelerating backlog conversion, improving working capital execution and the full quarter contributions from Thermon. Our backlog supports the higher revenue outlook, while our pipeline continues to expand across key markets and geographies. What we have worked ahead of us, the combination of record backlog, strong markets, improving margins and early integration progress, gives us confidence in our continued growth. Before we open up the call for questions, let me conclude here on Slide 15. First, CECO is exceptionally well positioned in very robust large and diverse end markets. Our opportunity pipeline now exceeds $8.5 billion and continues to grow across our key end markets and geographies. Power generation remains a major driver, but again, our growth is balanced across our diverse portfolio. Second, our financial performance continues to demonstrate the strength of CECO's operating model. Backlog increased 164%, orders increased 191%, revenue increased 54% and adjusted EBITDA increased 73%, with approximately 150 basis points of margin expansion. Third, the Thermon integration is progressing well. We have already captured approximately $13 million of annualized net adjusted EBITDA savings, representing 1/3 of our initial $40 million target, and our commercial teams are already generating cross-selling opportunities. And as we just reviewed, we are raising our full year outlook. Our record backlog and robust sales pipeline gives us the visibility that I've already outlined, and we continue to expect strong execution, synergy capture and cash generation. We have built a larger, more diversified and more profitable CECO, with leading positions across attractive industrial markets. I am pleased with the start of the combination and very confident in the opportunity is ahead. With that, we'll now open up the line for questions. Operator?

[Operator Instructions] And your first question comes from Aaron Spychalla from Craig-Hallum.

First for us on orders, it sounds like things have continued to be strong here to start the third quarter. Can you just maybe talk about that a little bit? And then on Power gen broadly, any changes that you're seeing in the outlook there, competitive dynamics and just how you're feeling for the supply chain, given the growth you're expecting there?

Yes. Strong start to the third quarter. We -- where we're continuing to see a very steady cadence of opportunities come through our power, our water, our industrial layer across all the markets that we've talked about. So we're not seeing any slowdown, Aaron, in the third quarter. Look, I'm sort of joking here, but -- when you end the quarter with $799 million, you sort of say, geez, couldn't we have found a way to get to $800 million? So you know we didn't pull anything in, if we ended up with $799 million. So I think we feel good about the second half of the year, easily eclipsing $2 billion or more for the year. Our third quarter continues to point in that direction, gives us confidence in that. And nothing's changed in the dynamic of competition. I think all of our markets have good competition. The pricing dynamic is favorable. Everyone, I think, understands that the supply chains can be tricky. We have built an incredibly strong global supply chain. I think it gives us that advantage. Our ability to take large complex projects with our decades of experience gives the customers confidence that we're the right partner in any market, but especially a high-performance market where there's a lot of demands on delivery schedules on timing. Last comment I'll make, because I think it's important, is the orders we get in power generation, for example, are associated with our customers' orders from many quarters ago. So as you think about the large power generation set of strategic leaders that we supply, they've talked about wins maybe in 2025 or certainly the very beginning of 2026. We're now associated with those jobs because when we're handed a PO, it is when they're ready for work to begin. And again, it's just a comment to really sort of drive home the point that when we get our purchase orders, our end customers are already working on the projects. And it's not associated with just reserving opportunities. It is now executing on those opportunities. Oftentimes, they come with permits are already in place. Certainly, the work to proceed is being authorized. Terms and conditions are binding and moving forward with the large cancellation clauses. So when we're booking orders, we're sort of -- we're later innings, I guess, I'd say, than some of our customers, which have been talking about these large growth for quite some number of quarters.

No, that's helpful. And then maybe on industrial water, were there any of the large orders that you've been talking about in the second quarter? And then just can you talk a little bit about where that business you think can be in a handful of years organically, inorganically? And then just talk about some of the margin dynamics in that business over the last couple of years and how you're thinking those projects can contribute.

Yes. So a lot there. But -- so the industrial water business is moving along fine in terms of growth year-over-year in terms of adding pipeline. The bigger orders that we pointed to earlier this year, majority of those continue to be delayed because of the conflicts in the Middle East. And so we're -- but we understand that. The dialogue with the customers remains very positive. So I think -- we don't have those baked in our outlook for the year. We never did. I think as we head into next year, our anticipation would be some of those start to show up in our bookings at very good margins over the years to establish a foundation and a series of reference jobs in industrial water. Our margin profile has typically been in the lower 20% gross margins. Our projects now are well over 30, quite oftentimes, and that EBITDA margins are above company average in terms of those industrial water jobs. So look, we're excited about what the pipeline looks like for growth. We understand why things are paused at the moment as supply chains and ability to do work in certain regions is a little bit compromised at the moment. But the projects are even more valuable, I think, going forward, because of the infrastructure rebuild and the investment that the customers are ready to do. So again, nothing in our outlook necessarily would be upside if things were to move in that direction in the second half of the year. And there are some pretty significant projects. So look, we're pretty bullish that this is a business that can easily get to $200 million, $300 million in revenue in the next few years organically as we're able to execute on these larger jobs.

Your next question comes from Jim Ricchiuti from Needham & Company.

A couple of questions. Maybe first question, improvement -- sequential improvement in gross margin in the quarter. And again, apologies if you may have covered this in your detailed presentation, but maybe talk a little bit about what drove that? And I'm wondering how we should be thinking about gross margins in the second half with...

Yes, it got caught off there a little bit, Jim. I'll start -- but I got the question, though. Thank you. And Peter can certainly provide additional color on it. Nice improvement in gross margins versus Q1. Part of that I would suggest is to remind everyone that we knew Q1 was a little bit -- was a little bit lower than an ongoing gross margin quarter would be. So the rebound in some aspects is just the return to normalcy, if you want to say, in terms of just gross margins. So adjusted gross margins being around 33.5%. We believe that, that eagles higher in the second half of the year with the things that Peter outlined in terms of productivity, higher margins in our backlog. And similar, I'll let Peter kind of provide additional color there. But we're pleased to be back in the 33.5% range. Thermon gross margins are higher. We only had one month of their gross margins on our results. So all indicators seem to lead towards a higher gross margin rate.

Nothing more to add.

So comprehensive. So there you have it.

Your next question comes from Tomo Sano from JPMorgan.

On SG&A, 22.4%, about 400 basis point improvement. Could you talk about decomposing structural actions versus volume leverage? And under what conditions would SG&A rate drift back up?

Yes. I'll take the second half of the question first, Tomo. We don't anticipate the rate drifting back up. It -- we felt we had elevated rates in prior quarters as we invested in putting in commercial infrastructure, expanding office and footprint in high-growth regions and adding capabilities in acquired businesses. Those investments, by and large, are concluded. The last remaining investment we're undertaking is the migration of all of our businesses to a single ERP platform. So structurally -- and we don't anticipate that rate going up. When I break it into the 2 halves, what was performance versus leverage, the majority, probably 2/3 of that number was a result of those expenses being held flat or coming down relative to volume. And we would expect that to continue to trend. Part of the synergies that Marcio discussed from the combination with Thermon will appear in that line.

And if I may follow up on cross-selling opportunities, that -- if you could talk about the [indiscernible] win of the cross-selling. And how should we think about, to make this repeatable rather than opportunistic? How are you designing the operating model across selling motions, solution, pricing and channels?

Yes. Well, the -- so we have a very focused cross-selling, maybe, I guess, I'd say, but it's also just -- we call it commercial synergies because it's really partner selling versus what I would say is cross-selling. And let me tell you why there's a difference. Cross-selling means we're sort of -- typically means you're training other businesses on how to sell your product and then they go and sell across channels. That does happen at CECO. But partner selling is we have visibility at CECO, let's say, to hundreds of millions of dollars, if not more than billions of dollars of, let's say, semiconductor and power generation and other very, very large detailed projects in our pipeline and in our backlog. The Thermon, for example, would have never had visibility too. Not suggesting that all of Thermon sales go through distribution or sales channels or channel partners and sales agents, but a significant portion to. And therefore, they get an order because the channel has determined what it needs from a heat trace perspective, and they're going to go with the leader. They're going to go with Thermon. We have visibility to actual heat trace in the projects more so than most companies because we're managing the installation of these tens, twenties, hundreds of millions of dollars worth of full systems and solutions. So the $0.5 million in power generation orders is we knew that in these projects that we've already booked and started to execute against, that we need heat trace that can be a leading product line, that can withstand incredible temperatures. And Thermon products are the best. And so our ability to now bring Thermon products into solving heat trace complexities in large power jobs is just the beginning. Anywhere where you're going to need heat trace, and we can bring the Thermon product line through our projects. We're going to as we should. And so with our backlog at $1.8 billion, our sales pipeline at $8.5 billion, the ability for us to do partner selling start to model in and spec in the Thermon products into our projects that we're bidding on in a collaborative way is a win-win. So it's really about visibility. Yes, there are many other things we're going to do to cross-sell and partner sell into various regions. Our teams are working together in all of our offices already, whether it be in Korea or Singapore, between Dubai and Abu Dhabi, they're starting to really partner and understand these opportunities. But power generation is the best example I can give, where we literally can just go, okay, let's now include the Thermon bundle of products into our solutions.

That's helpful. Congrats.

Your next question comes from Jim Ricchiuti from Needham & Company.

Apologies if I'm going to ask something that's been asked already. My connection has been breaking up. But -- maybe this has been covered, but talk, if you could, about the pipeline increase since the beginning of June, that increase in the pipeline, is that mainly power gen related?

Yes. We haven't covered that, Jim. Largely power gen related, but semiconductor as well. I would also add a little bit of Thermon to the sales pipeline because they have a sales pipeline that's is a -- that's a real number. Even though it's nowhere near the size because it's a different type of product solution selling, as we've already covered. It's not a project. It's a -- they do have projects. But it's really, power gen is probably the leader as we now continue to see bigger and bigger projects, data centers on the Thermon side, projects related to Thermon. And then look, semiconductor is starting to really find a nice trajectory. Look, Thermon has at least $1 billion to $1.5 billion of sales pipeline, Jim. So we're blending that in now with ours.

Okay. Got it. And Todd, I think we all appreciate the delays in industrial water in the Mid East. But it sounds like even excluding that, you're seeing good activity there. Can you give us some color on just the level of bookings or the increase you're seeing excluding the delayed projects?