Next presentation we have for you is going to be CECO Environmental. CECO is a global leader in process systems related to air, water, and energy transition or infrastructure, where they protect people, the environmental equipment, and the environment. With us today, we've got Todd Gleason, the CEO. Todd took over in 2020 and has done a fantastic job of growing both organically and through M&A. With that, I'll turn it over to Todd.
All right. 31 minutes, it says. Thanks, Steven. And of course, thanks to Three Part Advisors in organizing the conference. It's always great to be not only at this conference, but there are other conferences that they host in other locations. Pleasure to be presenting our material here this morning. I'll be quick. Many of you may not know much about CECO. I'll try to touch on some of the highlights. And then, of course, we're always available to deep dive with you if you're more interested. And then for those of you that do know our story, still some of this might sound pretty fresh or reiterate some of our key, we believe, investment thesis. Again, I'm Todd Gleason, CEO. And with that, let's dive in. I might make a few statements that this relates to. If not, you can ignore this slide. You can't ignore this slide.
While it looks like something that a lot of companies throw up as a values or a mission or just a common company tagline of sorts, I think it's relevant for more than just those reasons. Here's why. It actually touches on questions you might have as investors with respect to the fact that our name is environmental. We do, while we're diverse, 100% of our products solve an environmental challenge. That environment isn't just a natural environment or associated with regulation. If it is associated with regulation, it's not just associated with things like EPA. We're talking about people safety. When our products are purchased by our customers, while again, 100% is industrial and 100% solves some environmental solution or challenge, we start with we're here to protect the employees within our customers' facilities.
A common thing that I say is if you go home and you paint your bedroom tonight, you can sit back and enjoy the fruits of your labor with a glass of wine or a coffee. You paint that bedroom 1,000 times tonight, you let me know how that goes for you. If you're at Tesla and you paint 1,000 cars, they are removing those paint fumes, otherwise known as volatile organic compounds, not just because the EPA says they have to remove them, but because the employees and the environment within the facility are in danger if you don't remove them. We protect people. We protect industrial equipment because I guarantee Elon Musk wants to maximize the investment he made in that Tesla facility. By removing organic compounds, we help to make sure that those machines see their useful life.
Of course, yes, we do protect the environment. We protect the environment within the community and within Mother Nature. It is more than just a tagline for us. It is our why. It is why our 1,600 employees feel very passionate about what we do and how we do it and where we do it. It is why our customers call us. They are not just solving something that they are required to. They are solving something that they want to. It improves their processes and it improves their operations. Look, probably I do not think we cherry-picked at $5,369. We are at $63 today. Made you look. We are not. We are, as Steven said, very proud of the accomplishments we have had over the last few years. There is no public company CEO that does not look at the scoreboard.
I can tell you the reason this slide is here is not to just talk about what we have done. It is to show you that we have confidence in where we are going. Our entire focus is creating value for our customers, creating value for our employees. I am highly aligned, as is our board and our management team, to create value for our shareholders. As we look at the capital deployment of the things we are doing, we are thinking about CECO 2030 more than we are thinking about the fourth quarter. How do we take our stock from $50-ish to something that has $100 associated with it? I say that because I feel like we are on to a very successful building block operating model, which I will discuss in a second. It starts with some of the material on this slide. It is nice to be recognized by the Forbes and the Newsweeks.
With or without those accolades, we would say we're really proud of the businesses that we have and are building in terms of their niche leadership. Being very diverse, but very focused on industrial, industrial niche leadership. We may have a broad set of industrial air applications, but they're all focused on various vertical markets and various geographies. We have a strong leadership position in all of those. We enjoy being diverse, not just in our product and solution set, but in our geography, where we have approximately 45% of our sales outside of the U.S. That broad diverse balance really helps us, and we continue to invest in our resources around the world. When I joined, we had 13 employees in India. We now have 140. When I joined, we had a dozen or so in Southeast Asia.
We're well over 40, and we're growing significantly. We continue to invest in our capabilities, our resources, and our relationship with our global customers or customers that happen to be based internationally. That has produced a lot of growth as we expand our look forward into building our pipeline. Building our sales pipeline for the next two years is probably the thing we talk about the most inside our company. If we feel like we don't have access to the best growth markets that are in our wheelhouse to solve and to serve, then acquisitions become a focus for us, which toggles over to the right side of the slide, which is a very focused capital allocation model. We like having a healthy balance sheet, so we don't push the limits on that. Our credit card statement is something we can pay every single month.
We are willing to use capital to make smart, accretive strategic acquisitions. We've made over a dozen since I joined. We didn't make a single one until we could show ourselves and our shareholders that we could produce double-digit organic growth, a growth rate that we've maintained since we've started to do acquisitions. In fact, a majority of our acquisition strategy is to buy and combine with companies that we can help them grow 20%-30% in their first few years. The reason we buy those companies is we see unlocked market opportunity for the core CECO or for their product line. Here's just a snapshot of where we're located. I can leave that. I already mentioned, but I think it's important to reiterate that while, again, we serve a tremendous amount of diversified industries or a broad set of energy and power applications, it's 100% industrial.
I have nothing against businesses that have a focus on leisure or residential or commercial. Ironically, we say we serve them too. If the boat industry comes back, we're more than happy to be in those fiberglass facilities cleaning their air. When engineered wood moves up and down because of housing, we're more than happy to be providing them with air and water applications for their manufacturing process. Industrial means we serve a lot of industries. That's our focus. That's where we're good. By the way, for those of you that know industrial companies, I have grown up at several, Honeywell and Trane and Pentair, to name a few. We sell 80% of our products direct to the end customer or to the EPC firm. 20% goes through distribution.
I stand here before you as one of the few CEOs of an industrial company that has a significant capture of the pulse of the industry because our entire pipeline is based on actual projects that we're going to win or lose in the next 18 months, as opposed to a mathematical model of what we think the industry is going to do. There's nothing wrong with that. I do like distribution businesses, and I love short-cycle products. We're building a portfolio that includes more of those. Right now, today, I have a much better visibility to 2026 than most of my peers. It's something that we embrace. As we exit 2025 after we think a very successful growth year and as we've been building our capabilities and our business mix, we would leave you with the view that we have of the current environment.
These are pretty common headlines. By the way, we're contemplating changing our name to CECO AI. Power. I'd like to get some feedback on that and see if that's going to help our multiple. The power markets, the natural gas markets, and the global industrial markets are very strong. We'll come back to that. We are uniquely positioned, especially in power. Now, look, everyone has that buzzword. I would defy most companies our size to be able to show you where they play as a top leader in separation filtration, where they play in noise abatement and heat management, and where they play in emissions management. We are just getting started in the power cycle because as GE Vernova and Siemens and Mitsubishi and others, as they've been booking their large projects, we're mid to late cycle in those contracts.
Just this year is now the first time that we've started to announce some large projects, including the largest that we've ever booked, which was approximately $85 million. We've signaled that there's much larger projects and diverse projects of different size over the next 12 months-18 months coming because we are in deep dialogue with those customers. What's steady is in the middle here. We think that prices are strong and steady. We're certainly seeing some pockets of inflation that we're able to price through or manage our logistics and our materials management. No doubt there's been some head-scratching ebbs and flows of things associated with tariffs. The M&A pipeline where we participate, those multiples remain within the range that we are attracted to. Every transaction we've had has been accretive for us, meaning mid to high single-digit EBITDA multiples.
We're not seeing much pressure on the most, we think, attractive areas of our M&A pipeline. We continue to find ways to invest organically and inorganically. The uncertainties, now that the government shutdown's behind us, there's still a little bit of impact from that. That created some confusion, especially if you walked up to a TSA line over the last month. We've talked about this slide, which we minimize on the left, just to kind of revisit it for a second. What we show in that slide is that if you look at the 2015 to 2020, sort of pre when I and the leadership team started to run and transform the operations, the pipeline of sales that we pursued stayed relatively flat at about $1 billion. Whether or not that was market-driven, I wasn't at CECO to know.
I believe that our business is focused on the calls that they were receiving from the markets that we were in. As a result, you can see that the sales and performance was also relatively flat in that five-year period. There were ebbs and flows. If you're not growing your at-bats, you're not getting more hits. Over the last four to five years, we've taken our pipeline from $1.1 billion to initially $1.5 billion in the first year, and now from $1.5 billion to approaching $6 billion today. Let me break down how we went from $1.5 billion of sales pipeline. These are jobs that we expect to win or lose in the next 18 months. Not all of them happen. Some get pushed out or even canceled in terms of the customer's thinking. A majority do. Otherwise, they don't find their way in our pipeline.
About a third of that growth in our pipeline has come from, we think, our ability to make good, smart acquisitions into markets and geographies and verticals that allow us to go after even more pipeline. While they're all small-ish size organizations, it opens up a tremendous amount of growth for us and for the acquired companies. The next third, to maybe slightly more, is how aggressively we've been moving our business development and sales resources into new verticals and investing into new geographies. The smallest of the third is that by being in those geographies and getting good reference sites and getting good experience, whether we're losing initially or not, now the markets just have grown for us, and the markets are growing. Power for us a few years ago was maybe $75 million in bookings. Next year, it could be $300 million in bookings.
That's a market that has just doubled or tripled in size over the last year. We're benefiting certainly from some tides rising. You can see what we think are the key market drivers and some of our technology on the right, of which I won't read, but we think are helpful to understand our solution set and our diversity. We reiterated our outlook for 2025 from top to bottom. Our book to bill for the fourth year in a row will be much greater than one. This year, we're anticipating it to be $1.2, could be $1.3. That's exactly what it sounds like. If you know much about book to bill, that means that we've grown orders 20%-30% higher than we grew sales. If it's 1.2, it's 20% higher than we grew sales. By the way, this year, we're growing sales 25%.
That is a decent correlation. And by that, I mean a spot-on correlation to how you might think about our next 6 months to 12 months of growth. If our book to bill is $1.2, unless all of a sudden gravity changes direction on me, we will have double-digit growth in the next 12 months as a result of us adding that into our backlog. Our revenue of $725 million-$775 million, so call the midpoint $750 million, is on top of around $560 million in revenue that we did in 2024. Very good growth. Adjusted EBITDA here, we maintain it between $90 million and $100 million. We are investing heavily in growth. While our margin expansion is nice between 2024 and 2024 versus 2023, etc., we believe that we have markets that allow for us to invest in 20%-30% growth in the future.
We're going to continue to have that level of investment. If and when we see that growth starting to slow down, our investment thesis will change. You can see next year's outlook is equally or uniquely early for a public company to provide full-year guidance for next year. We have visibility. We have visibility because of our pipeline. We have visibility because of the relationship we have with our customers. We have a confidence that allows us in late October of this year to provide a full-year outlook for next year. For those of you that know me and have heard me, given the dynamics of our business profile, I feel like I have a lot of visibility into the quarter.
I'm much more comfortable giving a full-year outlook because the visibility we have in some of our longer cycle, larger projects gives me the confidence that the next 6 months to 12 months, those projects can ebb and flow a little bit in timing, but we'll capture the revenue in that 12 months. It's why we don't give quarterly guidance. We stay with annual. You can see here that our outlook for next year provides some nice growth on the top and the bottom line. Some positive themes I've reiterated or I've mentioned these. I'll reiterate them here. Natural gas power, more nuclear and geothermal. Nuclear is an example where we've maybe averaged a couple of projects a year, mostly in replacing or in refurbishing or in maintaining. That is now up threefold in terms of the number of nuclear, maybe even larger number of nuclear applications.
We're one of the few separation filtration companies that is certified to do both nuclear and DOD work. It is why we participate in naval as well as nuclear. The margins on that, as you can imagine, are quite attractive. The entire energy market, whether it potentially has five years' worth of legs to it or less or more, TBD, but certainly for the next two years, there is just so much activity that it is a growth market. In 2020 and in 2021 and 2022, and prior to my joining CECO, the two words industrial water, you can do a search, were never mentioned at CECO. Next year, we might do $100 million in sales in industrial water. We have grown organically.
As we have leveraged our relationship with our customer, we can solve not only separation filtration challenges in a gas pipeline, but we can also do the same thing in water, produce water, reverse osmosis. Acquisitions that we've made, several small companies have allowed us to have technology, patents, and reference sites, as well as location relationships like South Korea with their EPC firms. Those acquisitions have allowed us to catapult into new areas of water that we know to be very fragmented and void, we think, of unique technologies that we can bring to the market. We are extremely excited about industrial water. I would put a comment out here that in a few years, you're going to hear much, you're going to see an entire level of industrial water at CECO that $100 million pales in comparison to.
Those are the top of opportunities and market experience that we're starting to get with our customers. Industrial air has always been a strength of the company. Just over the last three years, we've done a really great job of continuing to pound away at a lot of the markets. What makes industrial air the most unique for us is our nimbleness. When we see automotive as a great market, we pivot resources to that with a lot of our solutions. As automotive slows down or becomes less of an attractive market, we pivot back to semiconductor or aluminum bev can or some other industries where we know that the next 12 months to 18 months looks very attractive. Our brands are well-known. We've made acquisitions to have new vertical and new geographic market access. Those brands are well-known.
As we at CECO can start to pivot those resources to those better markets, industrial air has been a steady double-digit grower, not because of one or two industries, but because of our diversification in those industries. Certainly, we like this slide. It speaks to the sustainable performance that every company aspires to do for our shareholders, for our employees, for our investment thesis. Obviously, on the left, 2021, $361 million, that was sort of an average year for the company over a five year to 10-year period. We kind of did an every two-year model here for visuals on the slide. Consistent growth. We're not cherry-picking the best years. Every year was a nice growth year. We're showing that. Obviously, 2026, as we indicated, we expect that our orders will be well over a billion.
In fact, there's a good chance that we'll do over $1 billion in 2025, depending on how the fourth quarter ends up with some of our opportunities. Same thing on revenue. Clearly, I already articulated that there's a strong correlation between book to bill orders and future revenue. Revenue trails, six months to 12 months on what our bookings are. It's not the only thing that drives our revenues. But booking certainly is the strongest indicator of where our growth is going to be over the next six months to 12 months. If you like a $1.2 book to bill, again, I suggest you're going to like next year's revenue, which is what we've already given you in a pretty broad range of $850 million-$950 million.
As I said on the earnings call in October, we'll know more and we'll articulate how 2026 is shaping up as early as Q1, that the bookings in Q4 of this year, what we're booking right now in November and in December, as well as what we book in early Q1, January, February, etc., will have even more visibility to a level of either conservatism or confidence over a range that we provided in October. More to come. Obviously, our EBITDA, again, we feel that we're very proud of the growth, the shareholder value we're able to create, the multiple that we're attracting, all things that we think are important to invest and maintain with all the right activities that are associated with that. Our margins are absolutely something that we're going to continue to build. We're just going to do so in a steady investment thesis.
Our Q3 summary and, frankly, the summary here to some extent, and then I'll open it up to questions. I'm happy to go back and revisit any of the materials. Look, we spend as much time as any company I've ever been at talking about our sales pipeline. I can assure you that the incentive models, that the decentralized nature of our organization, which I delayered in 12 months from arriving, allows us as a management team. It might be time-consuming that every month we go through our 10 platforms, but we talk about the sales pipeline. We talk about what they're doing to grow their sales pipeline. There's incentives for them to move into new markets. Win or lose, there's incentives for them. We look at acquisitions to fill those pipelines and to move into new markets that would be otherwise cost-prohibitive from capital.
There are times when it's more advantageous to invest organically in market expansion. We do it every day. It's why we've built the team in India, why we built the team in Singapore, why we've done other investments in new vertical markets and new technologies and new brand investments. There are times when capital deployment with association to acquisitions makes the most sense. It's fast. It's clean. When you're making every acquisition accretive, then you have the economics that are associated with that to immediately get a lift associated with buying things for seven to nine times EBITDA when obviously we're trading higher. We're taking advantage of the economics as well. Look, our Q3 was very strong. We believe our Q4 is going to follow a similar model. Our goal is to perform quarterly while we give annual guidance.
We understand the importance of continuous strength in terms of your performance and consistency. One of the reasons we showed that one slide is that every year we believe we're going to do better than last year and significantly better. We have an operating model around doing that. We're committed to a very steady, not just investment and management style, but a very steady return on those investments. The last thing for us is that we understand as diverse as we may look, understanding all of our market and market dynamics can be a challenge. We meet with investors, certainly, that they crank out their model and they want to understand what percentage and what market. That's key. We get it. That's important. We're certainly happy to roll up our sleeves and look at things analytically.
I stand up here today to say we know where we're at as a leader and as a niche leader in our industrial space. We know how fragmented it is. We know where we can invest to take share in industrial water from organizations that aren't as nimble as we are. Now, with our balance sheet and with our capabilities, we're authorized and with our reference sites to go and bid on some of these projects, big and small. Our ability to continue to transform this portfolio is in front of us. When I joined at $6.36, I could care less that we're at $50.
Our job and what we're trying to create is very much, I would say, in line with the admiration that I had of companies that, while I didn't work there necessarily, I worked at other great companies that created a lot of growth and shareholder value. My friends at Roper or AMETEK, TransDigm, Danaher, each of them had a similar and unique operating model. In 1997, when I was at Allied Signal, I didn't know any of them. When my friends went to Danaher, I said, "Why are you going to Danaher?" For a reason. When my buddy Matt went to AMETEK to run an $80 million company after running a $1 billion business within Honeywell, I said, "Why are you going to an $80 million company?" Because I have complete control over my P&L like a CEO would. Understood that operating model.
When my friend John Humphrey went to become CFO of Roper, now we have two board members on our board, one that's still on the Roper board, one that was for 13 years. We understand what they did to become Roper Industries before they became Roper Technologies. These are things that companies can model and do if you have a strong niche leadership position and an operating model that creates sustainable value creation. While it's not on our slides and it's not something that maybe we were touting a few years ago, I believe that we're really on to something that Brian Jellison was onto, that other companies were onto. Look, that's our goal here.
How that fits into your investment thesis or your interest, we're happy to talk about our view of the industrial space, happy to talk about power, or happy to talk about our strategy to create long-term shareholder value. That is what I want to make myself available for right now. With that, I'll hand it over to the room. Steven, whoever we're doing this, fire away. If there are any questions. If there are not, I appreciate your time. Yes, sir.
Your Profire acquisition earlier this year, that was an all-cash deal, if I'm not mistaken? It was. Considering your stock is trading at a pretty high multiple
Yeah, look, we look at, thank you. Why not use our stock for acquisitions? It is an option.
There's economics and there's certainly our stock is a currency that we could utilize. It's also gold. If we believe that our stock is on its way to $100, that isn't the best use of our stock, maybe. We have to understand what transactions and what's needed. We're growing and our pipeline has always had some larger transactions that we believe are incredibly valuable to the future of CECO if we were to pursue them. That could include stock just because of the balance sheet pressure that we wouldn't want to have from a leverage ratio. I would just share with you that I think we understand when there's a time and a place to use our stock. It would be not our first choice considering we believe that that currency is worth more than 7% interest at the moment.
However, we understand that there's a time and a place for stock utilization. In our pipeline in M&A, pretty balanced, mostly in general industrial. There are some spaces in energy that are unique that we feel we would be very attracted to. There's an early dialogue. All of our transactions have we rarely participate in a process. We don't normally participate against private equity. We don't have to. Almost all of our transactions have been relationships that we've developed, businesses we know, maybe even partnerships we've had like Transcend, Separation Filtration that we acquired in 2023, a long-term relationship we had as they were one of our suppliers and we wanted to control our destiny in membrane and vessel manufacturing. 50% of their business is aftermarket, very nice replacement cycle. Those are the types of acquisitions and power we can see doing more of.
Industrial is still a very fragmented space. We believe, like a lot of the companies I mentioned, that we're well-positioned and we're really not competing with private equity for some of that. In fact, Madison Industries, which we didn't compete against, they just sort of broke up a big swath of their industrial sector to Parker Hannifin. Look, it's going to be an interesting time. It's an interesting time.
Quick follow-up question. Was Profire your largest acquisition over the last five years?
That's the largest one that CECO's done. It was a $125 million acquisition at around nine times EBITDA pre-synergy, about seven and a half times EBITDA post-synergy, which we've captured in the first year. That was our largest acquisition. The Profire, hard for me to say, it turns out. The Profile of Profire, you say that 10 times and you come back to me.
I win because I said it once well and I'm done. 50% gross margins, low to mid-20s EBITDA margin, standard product, really good cash flows, niche leadership, industrial, solving an environmental hazard associated with flame and combustion management, great installed base with a lot of their business is going to be replacing their own installed base. They haven't grown outside the U.S. We're looking at that. They haven't grown much in industrial. We're looking at that. The acquisition, immediately accretive, much more short cycle, great free cash flow profile, a strong management team with good diverse locations, very smart, capable people, the exact type of acquisition that we like to do.
Even though it's a little bit larger and we could have used stock for it, I think now looking back at where our stock was when we made that acquisition, they might have asked for more stock or asked for stock. We used cash and now we're glad that we held on to all of our stock. Yes, sir. It trails a bit and then all of a sudden we have a pretty big catch-up moment, to be honest with you. It's a profile that we don't love. It's not because of sloppy or bad working capital management. It's just how some of the nature of some of our larger projects ebb and flow.
The guidance we give and we generally try to stick with it is 50%-60% of adjusted EBITDA should be our free cash flow for the year. There are some years when we've hit and exceeded that mark. Some years we're a little behind and then the next year we seem to catch up. I feel like our third quarter was very strong free cash flow generation. We have every reason to believe that our fourth quarter with working capital management, as well as some of the timing of some of our receivables, is also going to be very strong free cash flow generation. Our free cash flow guidance is usually about 50%, give or take, of our adjusted EBITDA. If you said next year, $120 million is the midpoint of our range, that means somewhere between $60 million-$75 million of free cash flow, roughly.
We signal that and we try to stick with that. Good question. Right now, our utilization of cash is paying down debt and making acquisitions. We do have bought stock in the past. We're more opportunistic. If there were a headline that drove our stock down, there was a tariff headline earlier this year that made our stock free. There was a moment then that I thought about buying back a bunch of stock, but we waited and we recovered. If there was a similar moment, I'll buy $10 million worth of stock really freaking fast. We just lapsed our existing authorization. It takes a phone call for the board. I'm not concerned. It's a good question and I'm happy to admit that our authorization did lapse.
To be honest with you, it's not the number one use of our capital at the moment because, first of all, our stock is on the rise. We like where it's heading. We like the support from the investment community. Thank you very much if you're a CECO shareholder. We think you're all great, smart, good-looking people. If you don't own our stock, if you want to join that club, we're listed on the NASDAQ. In the meantime, we're going to use our cash to maintain our balance sheet and make acquisitions besides our organic growth in capital, which we've grown. The investments in growth and capital, we've grown nicely over the last few years. No business is starved within CECO. We do say creativity before capital, but no business is starved. Any other questions? Yes, sir.
There's a lot of cyclicality in the different industries we're in. Again, as I mentioned, the strength of our diversity and our ability to be somewhat nimble allows for that. In power, we're in an upcycle. In energy, we're in an upcycle. We're not alone in talking about the health of the gas and gas infrastructure pipeline, midstream power. Look, there's certainly some questions around data centers and AI. Are we talking about a bubble or are we talking about something that is going to be a longer-term cycle? Baseload power has been something that's underinvested for years. Like I said, our bookings come now versus GE Vernova, Siemens, and others that came a year ago. We are in the cycle that is already existing.
We're just starting to get in that cycle. I think reshoring led by a handful of industries feels very healthy at the moment. Industrials feels good. That said, certainly there are parts of industrial that have been weak or average, including some of the leisure markets. I don't think there's a lot of companies that are expanding in, let's say, boat manufacturing. Automotive has had a moment where there's a pause at a minimum. Certainly, Europe has ebbs and flows of Germany and other geographic markets are somewhat soft. There's pockets. For us, we would say there's no reason for us to not feel really good about our roughly $6 billion pipeline. We track what drops out of it. You make it in our pipeline because you're a real deal. You drop out because you decide you don't like the budgetary process.
We have not seen any removal of projects related to them just deciding not to do a project in excess of a multi-year trend. That, to me, is a decent while we're not getting the Bureau of Labor Statistics maybe for the last month or two, we still look at our pipeline. If there's jobs that are being removed for economic reasons, budgetary reasons, then we would see that number tick up and we haven't seen that at all. We're a pretty interesting never really thought about that comment until I just made it. We're sort of a mini economic indicator of the industrial sector because of all the places we play. We're not going to start publishing that number to the Wall Street Journal, but you can call me and I'll let you know if that number changes.
We have one minute and 14 seconds for those of you that are oh, no, actually we've gone over. I have a red light blinking and I don't want to get in trouble. If you have any additional questions, I'll meet you outside. Otherwise, thank you very much.