CECO Environmental (NASDAQ: CECO) outlines Thermon merger pro forma results
CECO Environmental Corp. completed the acquisition of Thermon Group Holdings, Inc. on June 1, 2026 through a stock-and-cash merger and now presents unaudited pro forma condensed combined financial information for the combined company. CECO issued approximately 22.5 million shares of common stock to former Thermon holders and paid aggregate cash consideration of approximately $329.4 million, contributing to total preliminary consideration under ASC 805 of $2,264,023 (in thousands).
The transaction was financed with an incremental term loan of $235,000 (in thousands) and approximately $290,000 (in thousands) of revolving credit borrowings, both initially bearing interest at SOFR + 300 bps. Pro forma as of March 31, 2026, total assets are $3,656,427 (in thousands), including $911,000 (in thousands) of finite‑life intangibles and $1,166,388 (in thousands) of goodwill, and total liabilities are $1,580,566 (in thousands).
For the three months ended March 31, 2026, pro forma combined net sales are $354,251 (in thousands) with a net loss attributable to CECO of $(11,525) (in thousands), or $(0.20) per share, on 58,221,564 weighted‑average shares. For the year ended December 31, 2025, pro forma net sales are $1,296,392 (in thousands) and the pro forma net loss attributable to CECO is $(20,218) (in thousands), or $(0.35) per share, on 57,861,856 weighted‑average shares.
Positive
- None.
Negative
- Higher leverage and interest burden: Pro forma financing adds an incremental term loan of $235,000 (in thousands) and revolving credit borrowings of $290,000 (in thousands), driving additional annual interest and related costs of $34,889 (in thousands) in the 2025 pro forma statement.
- Shift from profit to pro forma loss: Including merger and financing effects, the combined company shows a 2025 pro forma net loss attributable to CECO of $(20,218) (in thousands), versus CECO’s historical 2025 net income attributable to CECO of $50,051 (in thousands).
Filing Explained
The amendment’s combined financials are informational estimates, not results the combined company actually produced in the shown periods; final purchase-price-allocation amounts may differ materially and will be determined within one year of the
8-K Event Classification
Key Figures
Key Terms
unaudited pro forma condensed combined financial information financial
Transaction Accounting Adjustments financial
Financing Adjustments financial
SOFR financial
ASC 805 financial
goodwill financial
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FAQ
What does CECO (CECO) disclose in this 8-K/A about its Thermon acquisition?
How much did CECO (CECO) pay to acquire Thermon Group Holdings, Inc.?
How was the Thermon acquisition financed by CECO (CECO)?
What are the key pro forma 2025 results for CECO (CECO) after acquiring Thermon?
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
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Explanatory Note
On June 1, 2026, CECO Environmental Corp. (“CECO” or the “Company”) filed with the U.S. Securities and Exchange Commission (the “SEC”) a Current Report on Form 8-K (the “Original Report”) reporting, among other events, the completion of its previously announced acquisition of Thermon Group Holdings, Inc. (“Thermon”) pursuant to the Agreement and Plan of Merger, dated as of February 23, 2026, by and among the Company, Thermon, and the other parties thereto.
This Current Report on Form 8-K/A (this “Amendment”) amends the Original Report to provide the unaudited pro forma condensed combined financial information required by Item 9.01(b) of Form 8-K, which was not included in the Original Report in reliance on Item 9.01(b). The audited consolidated financial statements of Thermon required by Item 9.01(a) of Form 8-K were previously filed with the Original Report and are incorporated by reference herein. Except as set forth in this Amendment, no other changes are being made to the Original Report. This Amendment should be read in conjunction with the Original Report.
| Item 9.01 | Financial Statements and Exhibits |
(a) Financial Statements of Business Acquired.
The audited consolidated balance sheets of Thermon Group Holdings, Inc. as of March 31, 2026 and March 31, 2025, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the two fiscal years in the period ended March 31, 2026, and the related notes thereto, are incorporated herein by reference as set forth in the Original Report.
(b) Pro Forma Financial Information.
The unaudited pro forma condensed combined balance sheet of CECO and Thermon as of March 31, 2026 and the unaudited pro forma condensed combined statement of operations of CECO and Thermon for the three months ended March 31, 2026, and the related notes thereto, are filed as Exhibit 99.1 hereto and incorporated herein by reference.
(d) Exhibits
| Exhibit Number | Exhibit Description | |
| 23.1 | Consent of KPMG LLP, independent registered public accounting firm for Thermon Group Holdings, Inc. | |
| 99.1 | Unaudited pro forma condensed combined balance sheet of CECO and Thermon as of March 31, 2026 and the unaudited pro forma condensed combined statement of operations of CECO and Thermon for the three months ended March 31, 2026 | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CECO Environmental Corp. | ||
| Date: July 31, 2026 | By: | /s/ Kiril Kovachev |
| Kiril Kovachev | ||
| Chief Accounting Officer | ||
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On February 23, 2026, CECO Environmental Corp. (“CECO” or the “Company”), a Delaware corporation, Longhorn Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of CECO (“Merger Sub Inc.”), Longhorn Merger Sub LLC, a Delaware limited liability company and a direct wholly owned subsidiary of CECO (“Merger Sub LLC”), and Thermon Group Holdings, Inc. (“Thermon”), a Delaware corporation, entered into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the Merger Agreement, on June 1, 2026 (the “Closing Date”), Merger Sub Inc. merged with and into Thermon (the “First Merger”), with Thermon surviving the First Merger as a wholly owned subsidiary of CECO. Immediately after the First Merger, Thermon merged with and into Merger Sub LLC (the “Second Merger”), with Merger Sub LLC surviving the Second Merger as a wholly owned subsidiary of CECO. In connection with the Second Merger, the name of the surviving entity was changed to Thermon Group Holdings, LLC. The First Merger and the Second Merger are collectively referred to as the “Mergers.” Concurrently with the execution of the Merger Agreement, on February 23, 2026, the Company entered into the Financing (as defined and further described in Note 1), which was also completed on June 1, 2026.
The following unaudited pro forma condensed combined financial information (“Pro Forma Financial Information”) of CECO has been prepared in accordance with Article 11 of Regulation S-X and gives pro forma effect to the Mergers and the Financing, and includes adjustments intended to illustrate the estimated pro forma effects of the Mergers (the “Transaction Accounting Adjustments”) and the Financing (the “Financing Adjustments”).
The unaudited pro forma condensed combined balance sheet as of March 31, 2026, gives effect to the Mergers and the Financing as if they had been completed on March 31, 2026, and combines the consolidated balance sheet of CECO as of March 31, 2026, with the consolidated balance sheet of Thermon as of March 31, 2026.
The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2026 and the year ended December 31, 2025, gives effect to the Mergers and the Financing as if they had been completed on January 1, 2025, and combines the consolidated statement of income of CECO for the three months ended March 31, 2026 and the year ended December 31, 2025, and the consolidated statement of operations and comprehensive income of Thermon for the three months ended March 31, 2026 and the period from January 1, 2025 to December 31, 2025 (i.e., the twelve months ended December 31, 2025). Refer to Note 3 for further details of the alignment of Thermon’s fiscal year end to CECO’s fiscal year end.
The unaudited Pro Forma Financial Information should be read in conjunction with the following:
| · | The accompanying notes to the unaudited Pro Forma Financial Information; |
| · | The unaudited consolidated financial statements of CECO as of and for the three month ended March 31, 2026, and the related notes, as included in CECO’s Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission (“SEC”) on April 30, 2026 |
| · | The audited consolidated financial statements of Thermon as of and for the year ended March 31, 2026, and the related notes, as included in Thermon’s Annual Report on Form 10-K as filed with the SEC on May 21, 2026; |
| · | The audited consolidated financial statements of CECO as of and for the year ended December 31, 2025, and the related notes, as included in CECO’s Annual Report on Form 10-K as filed with the SEC on March 2, 2026; |
| · | The unaudited consolidated financial statements of Thermon as of and for the nine months ended December 31, 2025, and the related notes, as included in Thermon’s Quarterly Report on Form 10-Q as filed with the SEC on February 5, 2026; and |
| · | The audited consolidated financial statements of Thermon as of and for the year ended March 31, 2025, and the related notes, as included in Thermon’s Annual Report on Form 10-K as filed with the SEC on May 22, 2025. |
The unaudited Pro Forma Financial Information is presented for informational purposes only and is not necessarily indicative of the operating results or financial position that would have been achieved had the Mergers and the Financing been consummated on the dates indicated or that the combined company may achieve in future periods. The Transaction Accounting Adjustments and the Financing Adjustments represent management’s best estimates and are based upon currently available information and certain assumptions that management believes are reasonable and supportable. As the unaudited Pro Forma Financial Information has been prepared based on these assumptions, the final amounts recorded may differ materially from the information presented herein. Further, the unaudited Pro Forma Financial Information does not reflect any operating synergies, dis-synergies, or cost savings that may result from the Mergers.
1
CECO Environmental COrp.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of MARCH 31, 2026
| CECO | Thermon | CECO | |||||||||||||||||||||||
| (in thousands, except share data) | (Historical) | (Reclassified) (Note 3) |
Transaction Accounting Adjustments (Note 5) |
Financing Adjustments (Note 6) |
Pro Forma Combined |
||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||
| Current assets: | |||||||||||||||||||||||||
| Cash and cash equivalents | $ | 45,411 | $ | 52,275 | $ | (518,449 | ) | 5(a) | $ | 518,449 | 6(a) | $ | 101,794 | ||||||||||||
| Restricted cash | 96 | 5,574 | - | - | 5,670 | ||||||||||||||||||||
| Accounts receivable, net of allowances | 278,528 | 125,414 | - | - | 403,942 | ||||||||||||||||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | 103,720 | 26,737 | - | - | 130,457 | ||||||||||||||||||||
| Inventories | 60,175 | 118,148 | 40,218 | 5(b) | - | 218,541 | |||||||||||||||||||
| Prepaid expenses and other current assets | 40,739 | 11,845 | 5,742 | 5(c) | - | 58,326 | |||||||||||||||||||
| Prepaid income taxes | 10,564 | 1,208 | - | - | 11,772 | ||||||||||||||||||||
| Total current assets | 539,233 | 341,201 | (468,381 | ) | 518,449 | 930,502 | |||||||||||||||||||
| Property, plant and equipment, net | 48,092 | 79,739 | 50,076 | 5(d) | - | 177,097 | |||||||||||||||||||
| Right-of-use assets from operating leases | 29,181 | 14,783 | - | - | 43,964 | ||||||||||||||||||||
| Goodwill | 291,128 | 269,041 | 897,347 | 5(e) | - | 1,457,516 | |||||||||||||||||||
| Intangible assets – finite life, net | 99,167 | 103,660 | 807,340 | 5(f) | - | 1,010,167 | |||||||||||||||||||
| Intangible assets – indefinite life | 9,678 | - | - | - | 9,678 | ||||||||||||||||||||
| Deferred income tax assets | - | 1,121 | - | - | 1,121 | ||||||||||||||||||||
| Deferred charges and other assets | 10,896 | 21,030 | (9,973 | ) | 5(c) | 3,619 | 6(b) | 25,572 | |||||||||||||||||
| Total assets | $ | 1,027,375 | $ | 830,575 | $ | 1,276,409 | $ | 522,068 | $ | 3,656,427 | |||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||||||
| Current liabilities: | |||||||||||||||||||||||||
| Current portion of debt | $ | 5,340 | $ | 7,813 | $ | (7,813 | ) | 5(g) | $ | 11,750 | 6(c) | $ | 17,090 | ||||||||||||
| Accounts payable | 137,594 | 41,110 | - | - | 178,704 | ||||||||||||||||||||
| Accrued expenses | 71,212 | 54,480 | - | - | 125,692 | ||||||||||||||||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | 184,223 | 19,471 | - | - | 203,694 | ||||||||||||||||||||
| Income taxes payable | 7,424 | 3,962 | - | - | 11,386 | ||||||||||||||||||||
| Total current liabilities | 405,793 | 126,836 | (7,813 | ) | 11,750 | 536,566 | |||||||||||||||||||
| Other liabilities | 7,033 | 8,813 | - | - | 15,846 | ||||||||||||||||||||
| Debt, less current portion | 247,907 | 133,259 | (133,259 | ) | 5(g) | 510,318 | 6(d) | 758,225 | |||||||||||||||||
| Deferred income tax liability, net | 26,336 | 10,861 | 197,527 | 5(h) | - | 234,724 | |||||||||||||||||||
| Operating lease liabilities | 23,106 | 12,099 | - | - | 35,205 | ||||||||||||||||||||
| Total liabilities | $ | 710,175 | $ | 291,868 | $ | 56,455 | $ | 522,068 | $ | 1,580,566 | |||||||||||||||
| Commitments and contingencies | |||||||||||||||||||||||||
| Shareholders’ equity: | |||||||||||||||||||||||||
| Common stock | 357 | 33 | 22,498 | 5(i) | - | 22,888 | |||||||||||||||||||
| Capital in excess of par value | 264,595 | 250,785 | 1,518,899 | 5(i) | - | 2,034,279 | |||||||||||||||||||
| Treasury Stock | - | (36,162 | ) | 36,162 | 5(i) | - | - | ||||||||||||||||||
| Retained earnings | 56,223 | 386,869 | (420,423 | ) | 5(i) | - | 22,669 | ||||||||||||||||||
| Accumulated other comprehensive loss | (8,976 | ) | (62,818 | ) | 62,818 | 5(i) | - | (8,976 | ) | ||||||||||||||||
| Total CECO shareholders’ equity | 312,199 | 538,707 | 1,219,954 | - | 2,070,860 | ||||||||||||||||||||
| Noncontrolling interest | 5,001 | - | - | 5,001 | |||||||||||||||||||||
| Total shareholders’ equity | $ | 317,200 | $ | 538,707 | $ | 1,219,954 | $ | - | $ | 2,075,861 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 1,027,375 | $ | 830,575 | $ | 1,276,409 | $ | 522,068 | $ | 3,656,427 | |||||||||||||||
The accompanying notes are an integral part of this unaudited pro forma condensed combined financial information.
2
CECO ENVIRONMENTAL CORP.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
THREE MONTHS March 31, 2026
| CECO | Thermon | CECO | |||||||||||||||||||||||
| (in thousands, except share and per share data) | (Historical) | (Reclassified) (Note 3) | Transaction Accounting Adjustments (Note 5) | Financing Adjustments (Note 6) | Pro Forma Combined | ||||||||||||||||||||
| Net sales | $ | 205,919 | $ | 148,332 | $ | — | $ | — | $ | 354,251 | |||||||||||||||
| Cost of sales | 142,000 | 83,048 | — | — | 225,048 | ||||||||||||||||||||
| Gross profit | 63,919 | 65,284 | — | — | 129,203 | ||||||||||||||||||||
| Selling and administrative expense | 46,091 | 51,457 | (31 | ) | 5(k) | — | 97,607 | ||||||||||||||||||
| Amortization expense | 4,003 | 2,957 | 10,331 | 5(l) | — | 17,291 | |||||||||||||||||||
| Acquisition and integration expense | 10,280 | - | — | — | 10,280 | ||||||||||||||||||||
| Gain on sale of Global Pump Solutions business | - | - | — | — | - | ||||||||||||||||||||
| Other operating expense | 1,670 | - | — | — | 1,670 | ||||||||||||||||||||
| Income from operations | $ | 1,875 | $ | 10,780 | $ | (10,300 | ) | — | $ | 2,355 | |||||||||||||||
| Other expense (income) | 1,392 | 348 | — | — | 1,740 | ||||||||||||||||||||
| Interest expense | 4,230 | 1,851 | — | 8,645 | 6(e) | 14,726 | |||||||||||||||||||
| Income (loss) before income taxes | (3,747 | ) | 8,581 | (10,300 | ) | (8,645 | ) | (14,111 | ) | ||||||||||||||||
| Income tax expense | (3,499 | ) | 5,836 | (2,825 | ) | 5(n) | (2,248 | ) | 6(f) | (2,736 | ) | ||||||||||||||
| Net income (loss) | $ | (248 | ) | $ | 2,745 | (7,475 | ) | (6,397 | ) | $ | (11,375 | ) | |||||||||||||
| Noncontrolling interest | 150 | 150 | |||||||||||||||||||||||
| Net income (loss) attributable to CECO Environmental Corp. | $ | (398 | ) | $ | (11,525 | ) | |||||||||||||||||||
| Income (loss) per share (Note 7): | |||||||||||||||||||||||||
| Basic | $ | (0.01 | ) | $ | (0.20 | ) | |||||||||||||||||||
| Diluted | $ | (0.01 | ) | $ | (0.20 | ) | |||||||||||||||||||
| Weighted average number of common shares outstanding (Note 7): | |||||||||||||||||||||||||
| Basic | 35,690,813 | 58,221,564 | |||||||||||||||||||||||
| Diluted | 35,690,813 | 58,221,564 | |||||||||||||||||||||||
The accompanying notes are an integral part of this unaudited pro forma condensed combined financial information.
3
CECO ENVIRONMENTAL CORP.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Year Ended December 31, 2025
| CECO | Thermon | CECO | |||||||||||||||||||||||
| (in thousands, except share and per share data) | (Historical) | (Reclassified) (Note 3) |
Transaction Accounting Adjustments (Note 5) |
Financing Adjustments (Note 6) |
Pro Forma Combined |
||||||||||||||||||||
| Net sales | $ | 774,381 | $ | 522,011 | $ | - | $ | - | $ | 1,296,392 | |||||||||||||||
| Cost of sales | 505,155 | 284,808 | 40,218 | 5(j) | - | 830,181 | |||||||||||||||||||
| Gross profit | 269,226 | 237,203 | (40,218 | ) | - | 466,211 | |||||||||||||||||||
| Selling and administrative expense | 200,728 | 140,216 | 18,677 | 5(k) | - | 359,621 | |||||||||||||||||||
| Amortization expense | 16,166 | 13,890 | 39,260 | 5(l) | - | 69,316 | |||||||||||||||||||
| Acquisition and integration expense | 9,555 | - | 33,051 | 5(m) | - | 42,606 | |||||||||||||||||||
| Gain on sale of Global Pump Solutions business | (63,701 | ) | - | - | - | (63,701 | ) | ||||||||||||||||||
| Other operating expense | 619 | 5 | - | - | 624 | ||||||||||||||||||||
| Income from operations | $ | 105,859 | $ | 83,092 | $ | (131,206 | ) | $ | - | $ | 57,745 | ||||||||||||||
| Other expense (income) | 2,101 | (1,937 | ) | - | - | 164 | |||||||||||||||||||
| Interest expense | 20,913 | 8,297 | - | 34,889 | 6(e) | 64,099 | |||||||||||||||||||
| Income (loss) before income taxes | 82,845 | 76,732 | (131,206 | ) | (34,889 | ) | (6,518 | ) | |||||||||||||||||
| Income tax expense | 29,738 | 17,935 | (27,958 | ) | 5(n) | (9,071 | ) | 6(f) | 10,644 | ||||||||||||||||
| Net income (loss) | $ | 53,107 | $ | 58,797 | $ | (103,248 | ) | $ | (25,818 | ) | $ | (17,162 | ) | ||||||||||||
| Noncontrolling interest | 3,056 | 3,056 | |||||||||||||||||||||||
| Net income (loss) attributable to CECO Environmental Corp. | $ | 50,051 | $ | (20,218 | ) | ||||||||||||||||||||
| Income (loss) per share (Note 7): | |||||||||||||||||||||||||
| Basic | $ | 1.42 | $ | (0.35 | ) | ||||||||||||||||||||
| Diluted | $ | 1.37 | $ | (0.35 | ) | ||||||||||||||||||||
| Weighted average number of common shares outstanding (Note 7): | |||||||||||||||||||||||||
| Basic | 35,331,105 | 57,861,856 | |||||||||||||||||||||||
| Diluted | 36,603,956 | 57,861,856 | |||||||||||||||||||||||
The accompanying notes are an integral part of this unaudited pro forma condensed combined financial information.
4
CECO ENVIRONMENTAL CORP.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(in thousands, except shares and per share amounts)
Note 1 – Description of Transactions
Mergers
On February 23, 2026, the Company entered into the Merger Agreement to acquire all the issued and outstanding equity securities of Thermon through the Mergers. On June 1, 2026, the Company consummated the Mergers. The Merger Agreement, among other things, provided for the combination of CECO and Thermon in a stock-and-cash transaction. As part of the First Merger, Merger Sub Inc. merged with and into Thermon, with Thermon surviving as a wholly owned subsidiary of CECO. Immediately after the First Merger, Thermon merged with and into Merger Sub LLC as part of the Second Merger, with Merger Sub LLC surviving as a wholly owned subsidiary of CECO.
Upon the terms and conditions of the Merger Agreement, at the effective time of the First Merger (the “Effective Time”), each share of Thermon’s common stock, par value $0.001 per share (“Thermon Common Stock”), issued and outstanding immediately prior to the Effective Time (other than any excluded shares) was converted into the right to receive, at the election of each holder, and subject to proration in accordance with the Merger Agreement, one of the following forms of consideration:
| (i) | a combination of 0.6840 shares of CECO’s common stock, par value $0.01 per share (“CECO Common Stock,” and such number of shares, the “Mixed Election Share Amount”) and $10.00 in cash (the “Mixed Consideration”); |
| (ii) | $63.89 in cash (the “Cash Consideration”); or |
| (iii) | 0.8110 shares of CECO Common Stock (the “Stock Consideration” and, together with the Mixed Consideration and the Cash Consideration, the “Merger Consideration”). |
Any shares of Thermon Common stock for which no election was made were treated as Mixed Election shares. Refer to Note 4 for additional information regarding the accounting treatment of the Mergers, preliminary Merger Consideration, and preliminary purchase price allocation.
Treatment of Thermon Equity Awards
Pursuant to the Merger Agreement, at the Effective Time, the outstanding equity awards of Thermon were treated as follows:
| · | Restricted stock units – Each outstanding Thermon restricted stock unit (a “Thermon RSU”) was assumed by CECO and converted into a restricted stock unit award of CECO based on the Stock Consideration exchange ratio and remains subject to the same terms and conditions as were applicable to such Thermon RSU. |
| · | Performance units – Each outstanding Thermon performance unit (a “Thermon PU”) was assumed by the Company and converted into a restricted stock unit award of CECO based on a number of shares of CECO Common Stock equal to the product of (x) the number of shares of Thermon Common Stock subject to such Thermon PU calculated based on target or actual performance (depending on the status of the applicable performance period) and (y) the Stock Consideration exchange ratio. Each converted Thermon PU remains subject to the same terms and conditions as were applicable to such Thermon PU, except that each converted Thermon PU is subject only to time-based vesting. |
| · | Stock options – Each outstanding Thermon stock option with an exercise price less than the Cash Consideration has been cancelled and converted into the right to receive an amount in cash equal to $63.89 less the applicable exercise price, while all other Thermon stock options have been automatically cancelled for no consideration. |
| · | Non-U.S. restricted stock units and performance units – For any outstanding Thermon RSU or Thermon PU held by an individual residing or providing services outside of the United States, the Company, at its sole discretion and as permitted by law, elected for such Thermon RSU or Thermon PU to be cancelled and converted into the right to receive cash equal to the product of (i) the number of shares of Thermon Common Stock subject to the applicable award and (ii) the Cash Consideration as delineated in the Merger Agreement. |
5
Financing
In connection with, and concurrently with the entry into the Merger Agreement, the Company obtained a debt commitment letter on February 23, 2026, with Bank of America, N.A. and BofA Securities, Inc. (“BofA”). On March 30, 2026, the Company amended its Fourth Amended and Restated Credit Agreement (the “Amendment Credit Agreement”). In connection with the consummation of the Mergers and pursuant to the Amended Credit Agreement, on the Closing Date, the Company incurred additional indebtedness consisting of $235.0 million borrowed under an incremental term loan facility and approximately $290.0 million of revolving credit loans under the Company’s existing revolving credit facility. The funding of these commitments was subject to customary conditions, including the consummation of the Mergers.
The Company funded the Mergers and related fees, costs and expenses with a combination of cash on hand, borrowings under the Company’s existing revolving credit facility, and borrowings under the incremental term loan facility. The unaudited Pro Forma Financial Information assumes that the Company borrowed $235.0 million under the incremental term loan facility and approximately $290.0 million under the Company’s existing revolving credit facility to complete the Mergers as further described in Note 5. Borrowings under the incremental term loan facility and the Company’s existing revolving credit facility initially bear interest at a rate of the Secured Overnight Financing Rate (“SOFR”) plus 300 basis points, which is subject to change based on the Company’s leverage ratio.
The execution of the debt commitment letter and the Company’s borrowings under the incremental term loan facility and its existing revolving credit facility are referred to herein as the “Financing.”
Note 2 – Basis of Presentation
The unaudited Pro Forma Financial Information was prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed combined balance sheet as of March 31, 2026, gives effect to the Mergers and the Financing as if they had been completed on March 31, 2026, and the unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2026 and the year ended December 31, 2025, gives effect to the Mergers and the Financing as if they had been completed on January 1, 2025.
The historical consolidated financial statements of CECO and the historical consolidated financial statements of Thermon were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and presented in U.S. dollars. The preparation of the unaudited Pro Forma Financial Information was based upon CECO’s fiscal year end, which ends on December 31. Thermon’s fiscal year ends on March 31. Given the difference between CECO's fiscal year end and Thermon’s fiscal year end, the historical statement of operations and comprehensive income information of Thermon have been adjusted to align with the fiscal year end of CECO in order to prepare the unaudited pro forma condensed combined statements of operations.
For purposes of the unaudited pro forma condensed combined balance sheet as of March 31, 2026, the historical consolidated balance sheet of CECO as of March 31, 2026, has been combined with the historical consolidated balance sheet of Thermon as of March 31, 2026. For purposes of the unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2026 and the year ended December 31, 2025, the historical consolidated statement of income of CECO for the three months ended March 31, 2026 and the year ended December 31, 2025, have been combined with the historical consolidated statement of operations and comprehensive income of Thermon for the three months ended March 31, 2026 and for the period from January 1, 2025, to December 31, 2025 (i.e., the twelve months ended December 31, 2025). Refer to Note 3 for further details of the fiscal year alignment.
Additionally, as discussed in Note 3, certain reclassifications were made to conform the historical presentation of Thermon’s consolidated financial statements to that of CECO’s financial statement presentation. The accounting policies used in the preparation of the unaudited Pro Forma Financial Information are those set out in CECO’s audited financial statements for the year ended December 31, 2025. Management conducted a preliminary evaluation of accounting policies used by Thermon compared to accounting policies used by CECO and did not identify any material differences in accounting policies. Accordingly, no adjustments to conform accounting policies have been reflected in the unaudited Pro Forma Financial Information. Following the completion of the Mergers, CECO will conduct a comprehensive review of Thermon’s accounting policies, and as a result of that review, CECO may identify differences, which may have a material impact on the unaudited Pro Forma Financial Information.
6
The unaudited Pro Forma Financial Information reflects the pro forma effect of the Mergers using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”), with CECO as the accounting acquirer, using the fair value concepts defined in ASC Topic 820, Fair Value Measurement, and is based on the historical financial statements of CECO and Thermon. Refer to Note 4 for additional information regarding the accounting treatment and preliminary purchase price allocation.
The unaudited Pro Forma Financial Information is presented for informational purposes only and is not necessarily indicative of the operating results or financial position that would have been achieved had the Mergers and the Financing been consummated on the dates indicated or that the combined company may achieve in future periods. The unaudited Pro Forma Financial Information does not reflect any anticipated synergies or dis-synergies, operating efficiencies or cost savings that may result from the Mergers, or any integration costs that may be incurred. The Transaction Accounting Adjustments and the Financing Adjustments represent management’s best estimates and are based upon currently available information and certain assumptions that the Company believes are reasonable and supportable. As the unaudited Pro Forma Financial Information has been prepared based on these assumptions, the final amounts recorded may differ materially from the information presented herein.
Note 3 – Fiscal Year End Alignment and Financial Statement Line Item Reclassification Adjustments
Fiscal year end alignment and financial statement line item reclassification adjustments have been made to conform Thermon’s historical financial statement presentation to CECO’s financial statement presentation in the unaudited pro forma condensed combined balance sheet and the unaudited pro forma condensed combined statement of operations.
7
Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2026
Reclassification Adjustments
The following table presents a summary of reclassification adjustments to conform Thermon’s historical consolidated balance sheet as of March 31, 2026, with CECO’s historical consolidated balance sheet presentation as of March 31, 2026 (in thousands):
| CECO | Thermon | Thermon | Thermon | |||||||||||||
| Consolidated Balance Sheet Line Items (Historical) |
Consolidated Balance Sheet Line Items (Historical) |
March 31, 2026 (Historical) |
Reclassification Adjustments |
March 31, 2026 (Reclassified) |
||||||||||||
| ASSETS | ||||||||||||||||
| Current assets: | ||||||||||||||||
| Cash and cash equivalents | Cash and cash equivalents | $ | 52,275 | $ | — | $ | 52,275 | |||||||||
| Restricted cash | — | 5,574 | (a) | 5,574 | ||||||||||||
| Accounts receivable, net of allowances | Accounts receivable, net | 125,414 | — | 125,414 | ||||||||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | Contract assets | 26,737 | — | 26,737 | ||||||||||||
| Inventories | Inventories, net | 118,148 | — | 118,148 | ||||||||||||
| Prepaid expenses and other current assets | Prepaid expenses and other current assets | 18,574 | (6,729 | ) | (a), (b) | 11,845 | ||||||||||
| Prepaid income taxes | 53 | 1,155 | (b) | 1,208 | ||||||||||||
| Total current assets | $ | 341,201 | $ | — | $ | 341,201 | ||||||||||
| Property, plant and equipment, net | Property, plant and equipment, net | 79,739 | — | 79,739 | ||||||||||||
| Right-of-use assets from operating leases | Operating lease right-of-use assets | 14,783 | — | 14,783 | ||||||||||||
| Goodwill | Goodwill | 269,041 | — | 269,041 | ||||||||||||
| Intangible assets, net | 103,660 | (103,660 | ) | (c) | — | |||||||||||
| Intangible assets – finite life, net | — | 103,660 | (c) | 103,660 | ||||||||||||
| Intangible assets – indefinite life | — | — | — | |||||||||||||
| Deferred income tax assets | Deferred income taxes | 1,121 | -— | 1,121 | ||||||||||||
| Deferred charges and other assets | Other non-current assets | 21,030 | — | 21,030 | ||||||||||||
| Total assets | $ | 830,575 | $ | — | $ | 830,575 | ||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
| Current liabilities: | ||||||||||||||||
| Current portion of debt | Current portion of long term debt | $ | 7,813 | $ | — | $ | 7,813 | |||||||||
| Accounts payable | Accounts payable | 41,110 | — | 41,110 | ||||||||||||
| Accrued expenses | Accrued liabilities | 49,779 | 4,701 | (d) | 54,480 | |||||||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | Contract liabilities | 19,471 | — | 19,471 | ||||||||||||
| Lease liabilities | 4,701 | (4,701 | ) | (d) | — | |||||||||||
| Notes payable | — | — | — | |||||||||||||
| Income taxes payable | Income taxes payable | 3,962 | — | 3,962 | ||||||||||||
| Total current liabilities | 126,836 | — | 126,836 | |||||||||||||
| Borrowings under revolving credit facility | 19,700 | (19,700 | ) | (e) | — | |||||||||||
| Debt, less current portion | Long-term debt, net | 113,559 | 19,700 | (e) | 133,259 | |||||||||||
| Deferred income tax liability, net | Deferred income taxes | 10,861 | — | 10,861 | ||||||||||||
| Operating lease liabilities | Non-current lease liabilities | 12,099 | — | 12,099 | ||||||||||||
| Other liabilities | Other non-current liabilities | 8,813 | -— | 8,813 | ||||||||||||
| Total liabilities | $ | 291,868 | $ | — | $ | 291,868 | ||||||||||
| Shareholders’ equity | ||||||||||||||||
| Common stock | Common stock | 33 | — | 33 | ||||||||||||
| Capital in excess of par value | Additional paid-in capital | 250,785 | — | 250,785 | ||||||||||||
| Treasury stock | (36,162 | ) | — | (36,162 | ) | |||||||||||
| Retained earnings | Retained earnings | 386,869 | — | 386,869 | ||||||||||||
| Accumulated other comprehensive loss | Accumulated other comprehensive loss | (62,818 | ) | — | (62,818 | ) | ||||||||||
| Total CECO shareholders’ equity | 538,707 | — | 538,707 | |||||||||||||
| Noncontrolling interest | — | — | — | |||||||||||||
| Total shareholders’ equity | Total equity | $ | 538,707 | $ | — | $ | 538,707 | |||||||||
| Total liabilities and shareholders’ equity | Total liabilities and equity | $ | 830,575 | $ | — | $ | 830,575 | |||||||||
8
| (a) | On its historical consolidated balance sheet, Thermon presented $5.6 million of restricted cash within prepaid and other current expenses. This reclassification adjustment is to present this amount within restricted cash in the pro forma condensed combined balance sheet to conform with CECO’s presentation. |
| (b) | On its historical consolidated balance sheet, Thermon presented $1.2 million of prepaid income taxes within prepaid and other current expenses. This reclassification adjustment is to present this amount within prepaid income taxes in the pro forma condensed combined balance sheet to conform with CECO’s presentation. |
| (c) | On its historical consolidated balance sheet, Thermon presented its finite-lived intangible assets within intangible assets, net. This reclassification adjustment is to present this amount within intangible asserts – finite life, net in the pro forma condensed combined balance sheet to conform with CECO’s presentation. |
| (d) | On its historical consolidated balance sheet, Thermon presented current lease liabilities as a separate line item. This reclassification adjustment is to present this amount within accrued expenses in the pro forma condensed combined balance sheet to conform with CECO’s presentation. |
| (e) | On its historical consolidated balance sheet, Thermon presented its borrowings under revolving credit facilities as a separate line item. This reclassification adjustment is to present this amount within debt, less current portion in the pro forma condensed combined balance sheet to conform with CECO’s presentation. |
9
Unaudited Pro Forma Condensed Combined Statement of Operations for the Three Month Ended March 31, 2026
Three-Months Ended Alignment
The historical statement of operations and comprehensive income information of Thermon for the three months ended March 31, 2026, has been derived as follows:
| (in thousands) | Year Ended March 31, 2026 (Historical) |
Less: Nine Months Ended December 31, 2025 (Historical) |
Three Months Ended March 31, 2026 (1) (Historical Aligned) |
|||||||||
| Sales | $ | 536,263 | $ | 3,87,931 | $ | 148,332 | ||||||
| Cost of sales | 293,207 | 2,10,159 | 83,048 | |||||||||
| Gross profit | 243,056 | 1,77,772 | 65,284 | |||||||||
| Operating expenses: | ||||||||||||
| Selling and administrative expenses | 158,290 | 1,05,988 | 52,302 | |||||||||
| Deferred Compensation plan expense/(income) | 599 | 1,354 | (755 | ) | ||||||||
| Amortization of intangible assets | 13,428 | 10,471 | 2,957 | |||||||||
| Restructuring and other charges/(income) | - | - | - | |||||||||
| Income from operations | 70,739 | 59,959 | 10,780 | |||||||||
| Other income/(expenses): | ||||||||||||
| Interest expense, net | (7,995 | ) | (6,144 | ) | (1,851 | ) | ||||||
| Other income/(expense) | 1,482 | 1,830 | (348 | ) | ||||||||
| Income before provision for income taxes | 64,226 | 55,645 | 8,581 | |||||||||
| Income tax expense | 19,655 | 13,819 | 5,836 | |||||||||
| Net income | $ | 44,571 | $ | 41,826 | $ | 2,745 | ||||||
| (1) | The historical consolidated statement of operations and comprehensive income of Thermon for the three months ended March 31, 2026, was derived from: (i) Thermon’s consolidated statement of operations and comprehensive income for the year ended March 31, 2026, as presented in its Annual Report on Form 10-K for the year ended March 31, 2026, as filed with the SEC on May 21, 2026; less (ii) Thermon’s consolidated statement of operations and comprehensive income for the nine months ended December 31, 2025, as presented in its Quarterly Report on Form 10-Q for the nine months ended December 31, 2025, as filed with the SEC on February 5, 2026. |
Reclassification Adjustments
The following table presents a summary of reclassification adjustments to conform Thermon’s historical consolidated statement of operations and comprehensive income information for the three months ended March 31, 2026, with CECO’s historical consolidated statement of income presentation for the three months ended March 31, 2026 (in thousands):
| CECO | Thermon | Thermon | Thermon | ||||||||||||
| Consolidated Statement of Income Line Items (Historical) |
Consolidated Statement of Operations and Comprehensive Income Line Items (Historical) |
March 31, 2026 (Historical Aligned) |
Reclassification Adjustments |
March 31, 2026 (Reclassified) |
|||||||||||
| Net sales | Sales | $ | 148,332 | $ | — | $ | 148,332 | ||||||||
| Cost of sales | Cost of sales | 83,048 | — | 83,048 | |||||||||||
| Gross profit | 65,284 | — | 65,284 | ||||||||||||
| Selling and administrative expenses | Selling, general and administrative expenses | 52,302 | (755 | ) | (a) | 51,457 | |||||||||
| Deferred compensation plan expense/(income) | (755 | ) | 755 | (a) | 0 | ||||||||||
| Amortization expenses | Amortization of intangible assets | 2,957 | — | 2,957 | |||||||||||
| Acquisition and integration expenses | — | — | — | ||||||||||||
| Gain on sale of Global Pump Solutions business | — | — | — | ||||||||||||
| Restructuring and other charges/(income) | — | — | — | ||||||||||||
| Other operating expense | — | — | — | ||||||||||||
| Income from operations | 10,780 | — | 10,780 | ||||||||||||
| Other expense (income) | Other income/(expense) | (348 | ) | — | 348 | ||||||||||
| Interest expense | Interest expense, net | (1,851 | ) | — | 1,851 | ||||||||||
| Income before income taxes | Income before provision for income taxes | 8,581 | — | 8,581 | |||||||||||
| Income tax expense | Income tax expense | 5,836 | — | 5,836 | |||||||||||
| Net income | Net income | $ | 2,745 | $ | — | $ | 2,745 | ||||||||
10
| (a) | On its historical consolidated statement of operations and comprehensive income, Thermon presented deferred compensation plan expense/(income) as a separate line item. This reclassification adjustment is to present this amount within selling and administrative expenses in the pro-form condensed combined statement of income to conform with CECO’s presentation. |
Unaudited Pro Forma Condensed Combined Statement of Operations for the Year Ended December 31, 2025
Fiscal Year End Alignment
The historical statement of operations and comprehensive income information of Thermon for the twelve months ended December 31, 2025, has been derived as follows:
| (in thousands) | Year Ended March 31, 2025 (Historical) |
Less: Nine Months Ended December 31, 2024 (Historical) |
Plus: Nine Months Ended December 31, 2025 (Historical) |
Twelve Months Ended December 31, 2025 (1) (Historical Aligned) |
||||||||||||
| Sales | $ | 498,207 | $ | 364,127 | $ | 387,931 | $ | 522,011 | ||||||||
| Cost of sales | 275,311 | 200,662 | 210,159 | 284,808 | ||||||||||||
| Gross profit | 222,896 | 163,465 | 177,772 | 237,203 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative expenses | 129,307 | 96,470 | 105,988 | 138,825 | ||||||||||||
| Deferred compensation plan expense/(income) | 452 | 415 | 1,354 | 1,391 | ||||||||||||
| Amortization of intangible assets | 13,681 | 10,262 | 10,471 | 13,890 | ||||||||||||
| Restructuring and other charges/(income) | (301 | ) | (306 | ) | — | 5 | ||||||||||
| Income from operations | 79,757 | 56,624 | 59,959 | 83,092 | ||||||||||||
| Other income/(expenses): | ||||||||||||||||
| Interest expense, net | (10,325 | ) | (8,172 | ) | (6,144 | ) | (8,297 | ) | ||||||||
| Other income/(expense) | 687 | 580 | 1,830 | 1,937 | ||||||||||||
| Income before provision for income taxes | 70,119 | 49,032 | 55,645 | 76,732 | ||||||||||||
| Income tax expense | 16,604 | 12,488 | 13,819 | 17,935 | ||||||||||||
| Net income | $ | 53,515 | $ | 36,544 | $ | 41,826 | $ | 58,797 | ||||||||
| (1) | The historical consolidated statement of operations and comprehensive income of Thermon for the twelve months ended December 31, 2025, was derived from: (i) Thermon’s consolidated statement of operations and comprehensive income for the year ended March 31, 2025, as presented in its Annual Report on Form 10-K for the year ended March 31, 2025, as filed with the SEC on May 22, 2025; less (ii) Thermon’s consolidated statement of operations and comprehensive loss for the nine months ended December 31, 2024, as presented in its Quarterly Report on Form 10-Q for the nine months ended December 31, 2025, as filed with the SEC on February 5, 2026; plus (iii) Thermon’s consolidated statement of operations and comprehensive income for the nine months ended December 31, 2025, as presented in its Quarterly Report on Form 10-Q for the nine months ended December 31, 2025, as filed with the SEC on February 5, 2026. |
11
Reclassification Adjustments
The following table presents a summary of reclassification adjustments to conform Thermon’s historical consolidated statement of operations and comprehensive income information for the twelve months ended December 31, 2025, with CECO’s historical consolidated statement of income presentation for the year ended December 31, 2025 (in thousands):
| CECO | Thermon | Thermon | Thermon | ||||||||||||
| Consolidated Statement of Income Line Items (Historical) |
Consolidated Statement of Operations and Comprehensive Income Line Items (Historical) |
December 31, 2025 (Historical Aligned) |
Reclassification Adjustments |
December 31, 2025 (Reclassified) |
|||||||||||
| Net sales | Sales | $ | 522,011 | $ | — | $ | 522,011 | ||||||||
| Cost of sales | Cost of sales | 284,808 | — | 284,808 | |||||||||||
| Gross profit | 237,203 | — | 237,203 | ||||||||||||
| Selling and administrative expenses | Selling, general and administrative expenses | 138,825 | 1,391 | (a) | 140,216 | ||||||||||
| Deferred compensation plan expense/(income) | 1,391 | (1,391 | ) | (a) | — | ||||||||||
| Amortization expenses | Amortization of intangible assets | 13,890 | — | 13,890 | |||||||||||
| Acquisition and integration expenses | — | — | — | ||||||||||||
| Gain on sale of Global Pump Solutions business | — | — | — | ||||||||||||
| Restructuring and other charges/(income) | 5 | (5 | ) | (b) | — | ||||||||||
| Other operating expense | — | 5 | (b) | 5 | |||||||||||
| Income from operations | 83,092 | — | 83,092 | ||||||||||||
| Other expense (income) | Other income/(expense) | 1,937 | — | (1,937 | ) | ||||||||||
| Interest expense | Interest expense, net | (8,297 | ) | — | 8,297 | ||||||||||
| Income before income taxes | Income before provision for income taxes | 76,732 | — | 76,732 | |||||||||||
| Income tax expense | Income tax expense | 17,935 | — | 17,935 | |||||||||||
| Net income | Net income | $ | 58,797 | $ | — | $ | 58,797 | ||||||||
| (a) | On its historical consolidated statement of operations and comprehensive income, Thermon presented deferred compensation plan expense/(income) as a separate line item. This reclassification adjustment is to present this amount within selling and administrative expenses in the pro forma condensed combined statement of operations to conform with CECO’s presentation. |
| (b) | On its historical consolidated statement of operations and comprehensive income, Thermon presented restructuring and other charges/(income) as a separate line item. This reclassification adjustment is to present this amount within other operating expense in the pro forma condensed combined statement of operations to conform with CECO’s presentation. |
Note 4 – Accounting Treatment, Preliminary Merger Consideration, and Preliminary Purchase Price Allocation
Accounting Treatment
Under ASC 805, all assets acquired and liabilities assumed in a business combination are recognized and measured at their acquisition date fair values, and transaction costs associated with the business combination are expensed as incurred. The excess of merger consideration over the estimated fair value of identifiable assets acquired and liabilities assumed, if any, is allocated to goodwill.
The consideration transferred calculated in accordance with ASC 805 is based on the Merger Consideration as delineated in the Merger Agreement. Any shares of Thermon Common Stock for which no election was made were treated as Mixed Election shares. The Cash Consideration and Stock Consideration were each subject to proration as set forth in the Merger Agreement. Thermon stockholders of record of approximately 41.18% of the outstanding shares of Thermon common stock elected to receive the Stock Consideration and, in accordance with the proration procedures in the parties’ merger agreement, all of such outstanding shares of Thermon common stock were converted into the right to receive approximately $1.48 in cash and 0.7920 of a share of CECO common stock per share of Thermon common stock in accordance with the applicable proration procedures. Cash was paid in lieu of fractional shares of CECO Common Stock based on the average closing price of CECO Common Stock on the Nasdaq Stock Market LLC (“Nasdaq”) for the five trading days ending on the last trading day immediately prior to the Closing Date. In connection with the Mergers, the Company issued approximately 22.5 million shares of CECO Common Stock to former holders of Thermon Common Stock and paid aggregate cash consideration of approximately $329.4 million.
In accordance with ASC 805, the Company assigned fair value to assets acquired and liabilities assumed using best estimates and assumptions as of the closing date of the Mergers. The determination of the estimated fair value of assets acquired requires significant judgment and often involves the use of various estimates and assumptions. The estimated fair value of the assets acquired and liabilities assumed is based upon available information and certain assumptions, which the Company believes are reasonable to illustrate the estimated effects of the Mergers.
The determination of the estimated fair value of assets acquired requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, royalty rates, customer attrition rates, asset lives, and market multiples, among other items. Fair values were determined by management using a variety of methodologies and resources, including external independent valuation experts. The valuation methods consisted of multi-period excess earnings, relief from royalty, current replacement cost, and other appropriate valuation techniques to determine the fair value of assets acquired and liabilities assumed.
12
The estimated fair values and purchase price allocation are preliminary. A final determination of the fair value of assets acquired, including any identifiable intangible assets, and liabilities assumed will be performed within one year of the Mergers’ closing date. Since the unaudited Pro Forma Financial Information has been prepared based on preliminary fair values, the final amounts may differ materially from the information presented herein.
Preliminary Merger Consideration
The following table presents the preliminary Merger Consideration:
| (in thousands, except share and per share data) | Amount | |||
| Mixed Consideration (Mixed elections and non-electors) | ||||
| Stock component | ||||
| Number of Thermon's Common Stock shares(1) | 17,231,130 | |||
| Exchange ratio per Merger Agreement | 0.6840 | |||
| Number of CECO Common Stock shares to be issued to Thermon shareholders | 11,786,093 | |||
| CECO Common Stock closing price as of June 1, 2026(2) | $ | 79.03 | ||
| Consideration in the form of CECO's Common Stock | $ | 931,455 | ||
| Cash component | ||||
| Number of Thermon's Common Stock shares | 17,231,130 | |||
| Per Share Cash Consideration | $ | 10.00 | ||
| Consideration in form of cash | $ | 172,311 | ||
| Total Mixed Consideration | $ | 1,103,766 | ||
| Cash Consideration | ||||
| Number of Thermon's Common Stock shares(1) | 2,142,408 | |||
| Per share Cash Consideration | $ | 63.89 | ||
| Fair value of All-Cash Consideration | $ | 136,878 | ||
| Cash issued due to Maximum Aggregate Stock Shares proration per the Merger Agreement(3) | $ | 20,207 | ||
| Total Cash Consideration | $ | 157,085 | ||
| Stock Consideration | ||||
| Number of Thermon's Common Stock shares(1) | 13,566,156 | |||
| Exchange ratio per Merger Agreement | 0.8110 | |||
| Number of CECO Common Stock shares | 11,002,153 | |||
| Less: CECO Common Stock shares due to Maximum Aggregate Stock Shares proration per the Merger Agreement(3) | (257,495 | ) | ||
| Number of CECO Common Stock shares to be issued pursuant to the Maximum Aggregate Stock Shares proration per the Merger Agreement | 10,744,658 | |||
| CECO Common Stock closing price as of June 1, 2026(2) | $ | 79.03 | ||
| Total Stock Consideration | $ | 849,150 | ||
| Fractional Shares(4) | $ | 68 | ||
| Total Merger Consideration per the Merger Agreement | $ | 2,110,069 | ||
| Pre-combination value of replaced Thermon equity awards | $ | 11,609 | ||
| Cash settlement of Thermon equity awards(5) | $ | 2,034 | ||
| Repayment of Thermon indebtedness | $ | 141,682 | ||
| Less: D&O “tail” insurance premium (6) | $ | (1,371 | ) | |
| Total preliminary consideration transferred per ASC 805 | $ | 2,264,023 | ||
| (1) | The amount of the shares of Thermon Common Stock is based on 32,939,694 shares of Thermon Common Stock issued and outstanding as of June 1, 2026. |
| (2) | The value of the shares of CECO Common Stock issued is based on the publicly quoted closing share price of CECO Common Stock as of June 1, 2026. |
| (3) | Pursuant to the proration provisions set forth in Merger Agreement, the aggregate Cash Consideration and Stock Consideration payable to Thermon stockholders is subject to proration such that the aggregate number of shares of CECO Common Stock issued in the Mergers does not exceed the Maximum Aggregate Stock Shares (as defined in the Merger Agreement). The unaudited pro forma condensed combined financial information reflects the estimated effect of such proration provisions, resulting in a reduction of 257,495 shares of CECO Common Stock issued as Stock Consideration and an increase of approximately $20.2 million as Cash Consideration. |
13
| (4) | Pursuant to the Merger Agreement, no fractional shares of CECO Common Stock will be issued in the Mergers. In lieu of any fractional share, Thermon stockholders received cash (without interest) based on the five trading days ending on the last trading day immediately prior to the Closing Date. |
| (5) | Reflects the cash settlement of in-the-money stock options held by Thermon employees and the pre-combination value attributable to the cash settlement of Thermon RSUs and Thermon PUs held by employees located outside the U.S. as of the Closing Date. |
| (6) | Reflects the premium associated with the directors' and officers' (“D&O”) liability insurance “tail” policy required to be obtained by CECO pursuant to the Merger Agreement. As the D&O policy provides a post-combination benefit to the combined company and was funded by Thermon at the close without reimbursement by CECO, the payment is reflected as a reduction of the preliminary consideration transferred |
Preliminary Purchase Price Allocation
The following table presents the preliminary purchase price allocation as if the Mergers have been completed on March 31, 2026:
| (in thousands) | Preliminary Fair Value | |||
| Total preliminary consideration transferred per ASC 805 | $ | 2,264,023 | ||
| Assets | ||||
| Cash and cash equivalents | 52,275 | |||
| Restricted cash | 5,574 | |||
| Accounts receivable | 125,414 | |||
| Costs and estimated earnings in excess of billings on uncompleted contracts | 26,737 | |||
| Inventories | 158,366 | |||
| Prepaid expenses and other current assets | 9,787 | |||
| Prepaid income taxes | 1,208 | |||
| Property, plant and equipment | 129,815 | |||
| Right-of-use assets from operating leases | 14,783 | |||
| Intangible assets – finite life | 911,000 | |||
| Deferred income tax assets | 1,121 | |||
| Deferred charges and other assets | 11,057 | |||
| Total assets | $ | 1,447,137 | ||
| Liabilities | ||||
| Accounts payable | 41,110 | |||
| Accrued liabilities | 55,659 | |||
| Billings in excess of costs and estimated earnings on uncompleted contracts | 19,471 | |||
| Income taxes payable | 3,962 | |||
| Deferred income tax liability | 208,388 | |||
| Operating lease liabilities | 12,099 | |||
| Other liabilities | 8,813 | |||
| Total liabilities | 349,502 | |||
| Net assets | 1,097,635 | |||
| Goodwill | $ | 1,166,388 | ||
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Note 5 – Transaction Accounting Adjustments
Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2026
The unaudited pro forma condensed combined balance sheet as of March 31, 2026, reflects the following adjustments:
| (a) | Reflects a decrease to cash and cash equivalents for the payment of the Cash Consideration and the cash component of the Mixed Consideration, a decrease related to the repayment of Thermon indebtedness, a decrease related to the cash settlement of Thermon equity awards, a decrease related to transaction costs (primarily banking, legal, and professional services fees) not reflected in the historical financial statements that the Company expects to incur related to the Mergers, and a decrease for a six-year “tail” policy for D&O liability and fiduciary liability insurance policy required to be obtained by CECO prior to the closing of the Mergers. The impact to cash and cash equivalents is summarized below: |
| (in thousands) | Amount | |||
| Cash Consideration and cash component of Mixed Consideration | $ | 329,396 | ||
| Repayment of Thermon indebtedness (1) | 141,682 | |||
| Cash settlement of Thermon equity awards (2) | 2,412 | |||
| Estimated transaction costs | 33,051 | |||
| Prepaid D&O liability and fiduciary liability insurance policy | 7,800 | |||
| Total pro forma adjustment to cash and cash equivalents | $ | 514,341 | ||
| (1) | Reflects the cash settlement of Thermon indebtedness, which is exclusive of unamortized deferred financing costs of $0.6 million. |
| (2) | Reflects the cash settlement of in-the-money stock options held by Thermon employees and the cash settlement of Thermon RSUs and PUs held by employees located outside the U.S. as of the closing date of the Mergers. |
| (b) | Represents the preliminary fair value adjustment of $40.2 million to inventories, which considers net realizable value for work-in-process and finished goods. |
| (c) | Reflects an increase of $7.8 million to prepaid expenses and other current assets for the six-year prepaid “tail” policy for D&O liability and fiduciary liability insurance, as further described in Note 5(a), and decreases of $2.1 million and $10.0 million to prepaid expenses and other assets and deferred charges and other assets, respectively, to reflect a zero acquisition-date fair value for Thermon’s capitalized software implementation costs. |
| (d) | Represents the adjustment to property, plant and equipment, net of $50.1 million, which represents the preliminary fair value of assets acquired in connection with the Mergers of $129.8 million as discussed in Note 4 and the elimination of Thermon’s historical property, plant and equipment of $79.7 million. Refer to Note 5(k) for details of acquired property, plant and equipment. |
| (e) | Reflects the adjustment to goodwill of $897.4 million, which represents the preliminary goodwill as a result of the Mergers of $1,166.4 million as discussed in Note 4 and the elimination of Thermon’s historical goodwill of $269.0 million. The goodwill is not expected to be deductible for tax purposes. |
| (f) | Represents the adjustment to intangible assets – finite life, net of $807.3 million, which represents the preliminary fair value of identifiable intangible assets acquired in connection with the Mergers of $911.0 million as discussed in Note 4 and the elimination of Thermon’s historical intangible assets of $103.7 million. Refer to Note 5(l) for details of acquired identifiable intangible assets. |
| (g) | Reflects the estimated repayment of Thermon indebtedness of $141.1 million and the write off of Thermon’s unamortized debt issuance costs associated with the indebtedness of $0.5 million in connection with the Mergers. |
| (h) | Represents an increase to deferred income taxes of $197.5 million due to an increase in deferred tax liabilities related to the estimated impact of purchase price adjustments in connection with the Mergers utilizing a blended statutory tax rate of 26% based on jurisdictions where income is generated. |
| (i) | Represents the adjustments to shareholders’ equity, which are summarized in the table below: |
| (in thousands) | Common Stock |
Capital in
Excess of Par Value |
Treasury
Stock |
Retained Earnings |
Accumulated other comprehensive loss |
|||||||||||||||
| Elimination of historical Thermon equity | $ | (33 | ) | $ | (250,785 | ) | $ | 36,162 | $ | (386,869 | ) | $ | 62,818 | |||||||
| Issuance of CECO Common Stock in connection with the Mergers (Note 4) | 22,531 | 1,758,075 | - | - | - | |||||||||||||||
| Estimated transaction costs (Note 5(m)) | - | - | - | (33, 051) | - | |||||||||||||||
| Write-off of Thermon unamortized debt issuance costs | - | - | - | (503 | ) | - | ||||||||||||||
| Pre-combination value of replaced Thermon equity awards | - | 11,609 | - | - | - | |||||||||||||||
| Total pro forma adjustments | $ | 22,498 | $ | 1,518,899 | $ | 36,162 | $ | (420,423 | ) | $ | 62,818 | |||||||||
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Unaudited Pro Forma Condensed Combined Statements of Operations for the Three Months Ended Marc 31, 2026 and Year Ended December 31, 2025
The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2026, and the year ended December 31, 2025, reflects the following adjustments:
| (j) | Reflects an increase to cost of sales of $40.2 million for the year ended December 31, 2025 related to the amortization of the inventory fair value adjustment further described in Note 5(b). CECO will recognize the increased value of inventories in cost of sales as the inventory is sold. For purposes of the unaudited pro forma condensed combined statement of operations, it is assumed that the increased value of inventories will be recognized in cost of sales within the first year following the Mergers. |
| (k) | Reflects a decrease to selling and administrative expense of $0.3 million for the three months ended March 31, 2026 and an increase of $18.7 million for the year ended December 31, 2025, which includes adjustments to depreciation expense related to the fair value of property, plant and equipment acquired further described in Note 5(d), incremental amortization related to the prepaid D&O liability and fiduciary liability insurance policy further described in Note 4, and the impact to share-based compensation expense related to post-combination share-based compensation attributable to Thermon equity awards converted to CECO RSUs and the cash settlement of Thermon awards. The pro forma adjustments to selling and administrative expense are calculated as follows: |
| (in thousands) | Preliminary
Fair Value (1) | Estimated Useful Life (Years) | Three Months Ended March 31, 2026 | Year Ended
December 31, 2025 | ||||||||||
| Land, building, and improvements | $ | 73,782 | 8 – 29 | $ | 396 | $ | 1,584 | |||||||
| Machinery and equipment | 53,284 | 1 – 10 | 3,559 | 14,237 | ||||||||||
| Construction-in-progress | 2,749 | N/A | - | - | ||||||||||
| Total property, plant and equipment at pro forma fair value | $ | 129,815 | $ | 3,955 | $ | 15,821 | ||||||||
| Less: Thermon historical property, plant and equipment, net and depreciation expense | (79,739 | ) | (2,336 | ) | (8,862 | ) | ||||||||
| Total pro forma adjustment to depreciation expense included within selling and administrative expense | $ | 50,076 | $ | 1,619 | $ | 6,959 | ||||||||
| Amortization of prepaid D&O liability and fiduciary liability insurance | 325 | 1,300 | ||||||||||||
| Post-combination share-based compensation expense | (1,975 | ) | 10,418 | |||||||||||
| Total pro forma adjustment to selling and administrative expense | $ | (31 | ) | $ | 18,677 | |||||||||
| (1) | The preliminary fair value of the property, plant and equipment acquired, excluding land, was estimated primarily based on current replacement cost. The preliminary fair value of land and right-of-use assets acquired and the related lease liabilities assumed are expected to approximate book value. |
| (l) | Reflects pro forma adjustments for the incremental amortization expense related to identifiable intangible assets further described in Note 5(f), which are calculated as follows: |
| (in thousands) | Preliminary
Fair Value | Estimated Useful Life (Years) | Three Months Ended March 31, 2026 | Year Ended
December 31, 2025 | ||||||||||
| Technology (1) | $ | 195,000 | 20 | $ | 2,438 | $ | 9,750 | |||||||
| Customer lists (2) | 570,000 | 20 - 25 | 6,100 | 24,400 | ||||||||||
| Tradenames (1) | 120,000 | 20 | 1,500 | 6,000 | ||||||||||
| Backlog (2) | 26,000 | 2 | 3,250 | 13,000 | ||||||||||
| Total intangible assets at pro forma fair value | $ | 911,000 | $ | 13,288 | $ | 53,150 | ||||||||
| Less: Thermon historical intangible assets, net and depreciation expense | (103,660 | ) | (2,957 | ) | (13,890 | ) | ||||||||
| Total pro forma adjustment to amortization expense | $ | 807,340 | $ | 10,331 | $ | 39,260 | ||||||||
| (1) | The preliminary fair values of technology and tradenames were estimated using the relief from royalty method, an income approach that considers the market-based royalty a company would pay to enjoy the benefits of the trade name or technology in lieu of actual ownership of the trade name or technology and discounts the hypothetical streams of royalty payments to present value. |
| (2) | The preliminary fair values of customer lists and backlog were estimated using the “multi-period excess earnings” method, an income approach that considers the net cash flows expected to be generated by the intangible asset by excluding any cash flows related to contributory assets. |
| (m) | Reflects increases to acquisition and integration expense of $33.1 million related to non-recurring transaction costs (primarily banking, legal, and professional services fees) not reflected in the historical financial statements that the Company expects to incur related to the Mergers. The estimated transaction costs are not anticipated to affect the unaudited pro forma condensed combined statement of operations beyond twelve months after the closing date of the Mergers. |
| (n) | Reflects a decrease in income tax expense of $2.8 million for the three months ended March 31, 2026 and $28.0 million for the year ended December 31, 2025, resulting from the income tax impact of the Transaction Accounting Adjustments utilizing a blended statutory rate of 26.0% for the three months ended March 31, 2026 and the year ended December 31, 2025. |
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Note 6 – Financing Adjustments
Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2026
The unaudited pro forma condensed combined balance sheet as of March 31, 2026, reflects the following adjustments:
| (a) | Reflects the impact to cash and cash equivalents related to the new indebtedness and issuance costs incurred in connection with the Financing further described in Note 1, summarized below: |
| (in thousands) | Amount | |||
| Proceeds: | ||||
| Incremental term loan facility | $ | 235,000 | ||
| Existing revolving credit facility | 290,000 | |||
| Total proceeds, gross | 525,000 | |||
| Payments: | ||||
| Issuance costs – incremental term loan facility | 2,932 | |||
| Issuance costs – existing revolving credit facility | 3,619 | |||
| Total pro forma adjustment to cash and cash equivalents | $ | 518,449 | ||
| (b) | Reflects an increase to deferred charges and other assets of $3.6 million related to deferred financing costs incurred in connection with the existing revolving credit facility. |
| (c) | Reflects an increase to current portion of debt of $11.8 million for the portion of borrowings under the incremental term loan facility, which is expected to be due within twelve months. |
| (d) | Reflects an increase to debt, less current portion of $510.3 million for amounts borrowed in connection with the Financing, which is net of debt issuance costs of $2.9 million related to the incremental term loan facility as described in Note 6(a). |
Unaudited Pro Forma Condensed Combined Statement of Operations for the Three Months ended March 31, 2026 and the Year Ended December 31, 2025
The unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2026 and the year ended December 31, 2025, reflect the following adjustments:
| (e) | Reflects the increase to interest expense for incremental interest expense incurred in connection with the Financing and the amortization of deferred financing costs. The pro forma adjustment to interest expense is summarized below: |
| (in thousands) | Three Months Ended March 31, 2026 | Year Ended December 31, 2025 | ||||||
| Incremental annual interest expense – incremental term loan facility (1) | $ | 3,492 | $ | 14,311 | ||||
| Incremental annual interest expense – existing revolving credit facility (2) | 4,263 | 17,052 | ||||||
| Amortization of deferred financing costs – incremental term loan facility | 495 | 1,943 | ||||||
| Amortization of deferred financing costs – existing revolving credit facility | 197 | 790 | ||||||
| Unused capacity fee – existing revolving credit facility (3) | 198 | 793 | ||||||
| Total pro forma adjustment to interest expense | $ | 8,645 | $ | 34,889 | ||||
| (1) | For purposes of the unaudited pro forma financial information, the interest rate for the borrowings under the incremental term loan facility is approximately 6.120%, which represents the 1-month Term SOFR reference rate administered by CME Group Benchmark Administration Limited as of June 1, 2026, plus 3.000%. |
| (2) | For purposes of the unaudited pro forma financial information, the interest rate for the borrowings under the existing revolving credit facility is approximately 5.880%, which represents the Daily Simple SOFR reference rate published by the Federal Reserve Bank of New York as of June 1, 2026, plus 3.000%. |
| (3) | For purposes of the unaudited pro forma financial information, the unused capacity fee is calculated as 0.40% of the expected unused capacity of the Company’s existing revolving credit facility of $198.2 million. |
A change in the interest rate of 0.125% would increase or decrease interest expense in the unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2026 by approximately $0.1 million and $0.1 million for the borrowings under the incremental term loan facility and the borrowings under the existing revolving credit facility, respectively, and approximately $0.3 million and $0.4 million for the borrowings under the incremental term loan facility and the borrowings under the existing revolving credit facility, respectively, for the year ended December 31, 2025.
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| (f) | Reflects a decrease to income tax expense of $2.2 million for the three months ended March 31, 2026 and $9.1 million for the year ended December 31, 2025 related to the income tax impact of the Financing Adjustments utilizing a blended statutory rate of 26.0% for the three months ended March 31, 2026 and the year ended December 31, 2025. |
Note 7 – Pro Forma Loss Per Share
The following table presents the calculation of pro forma basic and diluted loss per share for the three months ended March 31, 2026 and the year ended December 31, 2025:
| (in thousands, except share and per share data) | Three Month Ended March 31, 2026 | Year Ended December 31, 2025 | ||||||
| Pro forma loss per share – basic and diluted: | ||||||||
| Numerator: | ||||||||
| Pro forma net loss attributable to CECO Environmental Corp.– basic and diluted | $ | (11,525 | ) | $ | (20,218 | ) | ||
| Denominator: | ||||||||
| Historical weighted average number of common shares outstanding – basic, as reported in CECO’s historical statement of income | 35,690,813 | 35,331,105 | ||||||
| Estimated shares of CECO Common Stock to be issued in connection with the Mergers (Note 4) | 22,530,751 | 22,530,751 | ||||||
| Pro forma weighted average number of common shares outstanding – basic and diluted (1) | 58,221,564 | 57,861,856 | ||||||
| Pro forma loss per share – basic and diluted | $ | (0.20 | ) | $ | (0.35 | ) | ||
| (1) | The computation of diluted pro forma weighted average common shares outstanding excludes approximately 0.4 million CECO RSUs issued holders of Thermon RSUs and Thermon PUs in connection with the Mergers as of March 31, 2026 and December 31, 2025, as the effect would have been anti-dilutive. No CECO stock options or RSUs were outstanding as of March 31, 2026. As of December 31, 2025, approximately 1.3 million CECO stock options and RSUs were outstanding but were excluded from diluted loss per share because their effect would have been anti-dilutive. |
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