Good morning, and welcome to the CECO Environmental Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Steven Hooser, Investor Relations. Please go ahead.

Thank you, and thank you, everyone, for joining us on the CECO Environmental Second Quarter 2023 Earnings Call. On the call with me today is Todd Gleason, Chief Executive Officer; and Peter Johansson, Chief Financial and Strategy Officer. Before we begin, I would like to note that we have provided a slide presentation to help our discussion on our website. The call will also be webcasted along with the earnings presentation, which is also on our website at cecoenviro.com. The presentation materials can be accessed through the Investor Relations section of that website. I’d also I’d like to caution investors regarding forward-looking statements. Any statements made in today’s presentation that are not based on historical fact are forward-looking statements. Such statements are based on certain estimates and expectations and are subject to a number of risks and uncertainties. Actual future results may differ materially from those expressed or implied by the forward-looking statements. We encourage you to read the risks described in our SEC filings included in the Form 10-K from the year ended December 31, 2022. Except to the extent required by applicable securities laws, we undertake no obligation to update or publicly revise any of the forward-looking statements that we make here today, whether as a result of new information, future events, or otherwise. Today’s presentation will also include references to certain non-GAAP financial measures. We provided the comparable GAAP and non-GAAP numbers in today’s press release and provided non-GAAP reconciliations in the supplemental tables in the back of the slide deck. And with that, I’d now like to turn the call over to Chief Executive Officer, Todd Gleason. Todd?

Thanks, Steven, and thank you for your continued support and interest in CECO. I’m going to start with Slide number 3, which is entitled Q2 2023 Earnings Highlights. As we highlighted in today’s press release, CECO delivered multiple financial records during the second quarter. Over the past several quarters, we have communicated that our sales pipeline was strong and growing, and throughout the second quarter, we continue to add to our sales pipeline, which is now well over $2.5 billion worth of global opportunities. The growth of our target markets is a positive result of the focused investment we strategically made to add sales and business development capabilities across our existing platforms, and these investments continued to produce outstanding growth in the second quarter as we reported the highest ever quarterly bookings in our company’s history. We continue to have high confidence in our sales pipeline, which remains strong across our diversified industrial end markets. Bookings weren’t the only record in the quarter. I am pleased to also highlight that our second quarter revenues represented the highest quarterly sales in the company’s history as well. And with our record backlog, we expect future sales growth to remain very robust. CECO also delivered the highest gross profit dollar level in our history, benefiting from enhanced productivity, growth, and product mix. We look forward to more record levels of profitability in the future. Expanding further on our sales pipeline, the strategic investments into each of our platforms and commercial capabilities has done more than just build a large sales opportunity funnel. We have also been steadily transforming the overall CECO portfolio book of business. This transformation started approximately 3 years ago with a comprehensive redesign of our organizational structure and focus towards a more diversified, micro-aligned, and balanced business mix with the…

Thank you, Todd. I’m very pleased today to be able to present to all attendants another set of solid financial results that confirm that CECO is still on track to deliver another strong year of performance. I’d like you to turn to Slide 7 with me. On this slide, I present a more detailed picture of the Q2 2023 results, that Todd walked you through on Slide 4. Orders in the quarter of $162.9 million were the highest for any quarter in company history. This result brings CECO’s order rate to over $560 million on a TTM basis and a record $310 million for the first half of 2023. Revenues of $129.2 million were the highest for any quarter in company history, continuing a 4-quarter trend of record-setting revenue delivery benefiting from continued strong execution. This result brings CECO’s TTM revenues to over $467 million and $242 million for the first half of 2023. Gross profit margins in the quarter of 38.8% were an increase of 80 basis points year-over-year and gross profit dollar delivery of approximately $40 million was the highest in any quarter in company history. Adjusted EBITDA for the quarter was up 29% year-over-year to $13.9 million, inclusive of the higher operating expenses we incurred from the investments made in platform and functional resource additions supporting CECO’s current and future growth. SG&A additions from acquired businesses and expenses from M&A. Adjusted EBITDA margins in the quarter was 10.6%, up 60 basis points from the year ago period and up 200 basis points sequentially. You may recall that in the first quarter, when we discussed EBITDA margins, Todd highlighted the investments that we made that had an impact to EBITDA margins in that period. We’ve now recovered and are benefiting from those investments and I’ll walk you through…

Thanks, Peter. A lot of good details with respect to our financials and various insights into our performance. Let’s go to Slide number 15. Peter mentioned, I’m going to highlight our outlook for the balance of the year. And as we mentioned earlier, we are raising our guidance for the full year for both revenue and adjusted EBITDA. Let’s start with revenue. We now expect to deliver between $500 million and $525 million for the full year. This would be approximately a 21% growth over full year 2022 if you use the midpoint of that range. Our previous revenue guide had been to exceed $485 million. With our record backlog and large opportunity pipeline, we are confident in our ability to achieve our new revenue range. With respect to adjusted EBITDA, we now expect to produce between $50 million and $55 million for the full year. Our previous outlook suggested at least $50 million for the full year, but with the increase in revenue, we are aligning our ranges to reflect growth to adjusted EBITDA as well. The year-over-year growth would be approximately 25% if you use that midpoint of the range. We expect to deliver 50% to 70% of free cash flow in the full year. This free cash flow range has not changed and we believe represents our normalized cash flow generation. On the bottom half of the slide, I want to highlight the macro environment. While headwinds like inflation and concerns around financial tightening linger, we are directly benefiting from a host of important and durable growth drivers. I won’t read all the tailwinds, but no doubt the reshoring and renewing of industrial strategic investments in North America is a positive for CECO. Additionally, increased investment in global infrastructure, green investments in the energy transition, and specific…

Thank you. We will now question-and-session. [Operator Instructions] The first question we have is from Rob Brown of Lake Street Capital Markets. Please go ahead.

Good morning, Todd and Peter, and nice job in the quarter.

Thanks, Rob. Good morning.

Just want to get a little bit more into the order environment, which is what you’ve said is obviously very strong. How sort of broad-based is it? And where are you seeing growth coming from? And I think it’s interesting you talked about some of the incremental growth drivers, and I’d like to get some color on when you think those start to flow through as well.

Yes. Good question, Rob. It’s interesting. We – about a year ago, we introduced a slide where we showed all eight platforms, and we felt at the time, it was just helpful to give people visibility to the diversity of our portfolio, a little differently. Probably could have been something we would – we could have shown again this quarter just to show that balanced growth across most of our platforms as well, and we may introduce that slide again in the near future. But regardless, what you would see if you saw the growth across almost all of our platforms is that broad balance that we’re talking about. It’s not just one or two platforms that is up significantly. It is fairly balanced between air businesses, water businesses. and our energy and energy transition businesses. And that’s probably the thing that we’re most excited about is it feels very balanced. I mean, Peter and I could probably dive into just a long list of exciting opportunities, whether it’s in battery and electric vehicle manufacturing capacity or energy transition markets. I’d say we’re in a pretty good sweet spot right now, and it’s reflecting in our order bookings.

Rob, just to give you a sample, we’ve booked large orders and backup and load stabilization power for the largest solar plant being built in the United States. We booked orders for the largest aluminum mill to be built in the United States in 30 years. We booked orders in EV battery plants and EV battery recycling plants. We have bookings in new LNG liquefaction export facility going into South Texas. We booked orders in India, China, Korea, the Middle East, and in Europe across the swath of water resource conservation, treatment, and reuse. And almost very excitingly, we’ve begun to start seeing orders in, say, more traditional manufacturing environments return. So that’s good for our dust collector and our cyclone businesses. And Todd and I just reviewed one this morning for a garbage gasification facility, where they hit – where they essentially turn with very high temperature garbage into molecules that they capture and then turn into something that can be used as a fuel. So that’s at least eight, maybe nine segments there we’re seeing orders. It’s just that broad.

And Rob, not to add. I mean, it’s a simple question. We’re giving you a long answer. First of all, one man’s garbage is another man’s fuel. I think as the saying goes, but I would even suggest, Rob, that the order I mentioned in our prepared remarks, the largest aftermarket order of $9 million in industrial water. We actually just booked that. And while I said that, I think it’s important to maybe highlight that that’s actually a third quarter booking, not a second quarter booking. And so that just gives you another example of an order that we’ve been investing to position the company to grow our shorter-cycle aftermarket services business for, as you know, Rob, for many quarters and probably a few years. And again, I feel like we’re just starting to see some of those benefits. So pretty exciting stuff. And obviously, we’re sharing some of our energy on the question.

Great. Thank you for all the color. And then in the aftermarket business, that’s one of the questions I had about how do you sort of – where is that at sort of as a percentage of the business today? And I know those investments are starting to mature. Where do you see that kind of going over the next couple of years?

Yes. Look, we’re still – we still believe that over the next few years, our goals haven’t changed. We want to get to 50% mid- to long cycle, 50% short cycle. We think that big orders like the $9 million aftermarket services order is a great example of how we’re going to get there. We’re still probably around 30% of our portfolio being short cycle and I would say even though we’re growing that very solidly double digits, our long cycle and mid-cycle businesses are also growing fairly rapidly. So look, the reason we have, if you want to call it, close the gap even further is because just across the board, our company is growing solid double digits. So look, it’s hard to become 50% short cycle when mid- and long cycle continues to grow at the rate bit it is but most of our acquisitions are mid- to short-cycle acquisitions. Those are going to continue as those businesses we expect to double. We have – again, we have a model that gets us there. We’re still committed to getting there in the next few years. We believe that balance is going to be critical for a host of important operating reasons. And again, to remind the audience, 3 years ago, we were 80% long cycle, 20% short cycle. – and now we’re 70% long and mid-cycle, and 30% short cycle. And the reason I stress long and mid-cycle is that we have a lot more revenue that turns in 3 to 6 months versus before it would turn in 6 to 12 months. So again, we just continue to sort of tighten up our business mix favorably. And again, we feel very confident in our ability to get to that more balanced business mix over the next few years.

Great things. I’ll turn it right over.

Thanks, Rob.

The next question we have is from Aaron Spychalla of Craig-Hallum. Please go ahead.

Good morning, Todd and Peter. Thanks for taking the questions.

Yes, good morning, Aaron.

Good morning. First for me, can you just talk a little bit about the margins that you’re seeing in backlog today? And then just on the operational excellence programs for margin expansion, can you give some details on some of the initiatives there starting in the second half and just areas you see a margin progression towards that 15% plus goal over time for EBITDA margin?

I’ll give a sort of a high-level answer, and I’ll see if Peter wants to add some more depth to this. Margins in backlog continue to trend higher. We would – and we’re showing that as it comes through. Again, we continue to make investments in both our ability to drive lean and operating excellence and obviously, in SG&A to support growth and global expansion. So some of our margin progress is still being kept a little bit through our investments. But in fact, in our emerging markets, they’re seeing the highest gross margins and backlog, finally getting up above 30% gross margins, whereas before they were in the mid-20s, if not high 20s, about a year ago. So we’re seeing 200 to 300 basis points of higher margins in our high-growth regions markets from just a year ago. Again, we still expect that our gross margins, which are reflected in our backlog as we exit the year or 100 to 150 basis points higher than they’re currently at. We’d like to exit the year at 32%, 33% gross margins on that run rate. So that continues to be our goal. And then try to sustain that and improve upon those gross margins as we head into next year. When we provide that outlook, we’ll be clear on what we think those margins and EBITDA margins look like as well. And then I’ll let Peter talk about some of the specifics, maybe with respect to some of the programs and operating excellence.

That 100 to 150 basis points higher than prior quarters is a good number. It varies by platform but in aggregate, that’s what we’re seeing as we book and then begin to execute on projects. One other thing we’re beginning to see, Aaron, that’s a positive is we bid every job with the contingency. Contingency is to accept things that were unforeseen at the beginning of a project, and that’s generally in the neighborhood of 3% to 5% of project cost value. We’re seeing more and more of our projects now either release that contingency without it being utilized or only a small portion of it being utilized. So we’re realizing higher-than-bid gross margins as well, which is a real testament to our teams, improving on their project and customer management expertise. On the operating investments, operating improvement investment side, we’re really focused on the operations and our fabrication partners outside of the organization. As we’ve discussed, well over 50% of what we deliver to customers is produced by a partner, a fabrication partner or a supplier. And what we’re finding is our resources, our teams are spending a lot of time helping them find savings, improve capacity, improve flow and throughput to continue to support our growth. And that’s yielding benefits from the standpoint of being able to maintain an existing relationship with an existing customer who knows us and knows our products, delivers at higher quality and lower cost. It’s allowing them to be more responsive to us when we have a requirement that might change during a project, and more importantly, it’s allowing us to yield savings. Another area our teams are focused on is buying raw materials. Historically, we didn’t aggregate materials across multiple businesses. We have that opportunity now that we look at our spend in three categories across the CECO. It’s in metals, principally, but also in freight and logistics and things that all of our locations or businesses buy. And we’re beginning to start to see those benefits trickle in. This is new for us. This company operated very – I won’t say a very segregated manner in sourcing and in procurement. We’re beginning to operate as one company now more consistently. In fact, I just approved in order for I think it was 30,000 tons of stainless steel that will be consumed by at least three businesses over the next quarter by their fabricators where we’re purchasing the material and supplying it to the fabricator rather than the fabricator purchasing on their own. And that yields benefits to us as well. We should be able to provide better insights into the, I’ll call it, the rather than anecdotal, but actual evidence of the improvement in coming quarters.

Great. Thanks for the color there. And then just maybe second on M&A. Can you kind of talk about the pipeline there? What you’re seeing from valuation and activity? I know you’ve been busy there, but should we just expect to continue programmatic M&A going forward and the potential for any kind of larger deals as we look out?

No larger deals, we don’t think. There’s – doesn’t – look, I would say we have a good track record and a lot of energy and I believe, capabilities of how we’re doing, what we’re doing at the moment. And there continue to build out a really solid leadership position in industrial water and add components and capabilities associated with the energy transition. And I think the size of deals that we’ve been doing, they could go up a little bit, I suppose but for the most part, we’re – we believe that we continue to find great businesses with great leadership teams at the right price. And if we can’t find that combination, then it’s not a deal for us.

Makes sense. Thanks. I’ll turn it over.

Thanks.

The next question we have is from Jim Ricchiuti of Needham & Company. Please go ahead.

Hi, good morning. So you’ve already covered a lot of ground here. I wanted to go back to this aftermarket order you highlighted that came in, in the current quarter. Maybe put a little context around this. What was the largest previous aftermarket order? And is this in the Peerless area – this is industrial water?

It is. It’s industrial water. It’s a project that we help provide an industrial water package system, a very large system that we probably highlighted in previous quarters. And we had been negotiating all along to be the supplier of their aftermarket needs as well, and we secured that a number of quarters ago, but we weren’t able to book the order until it was obviously led by the customer. So we’re excited about that. I got to tell you, Jim, I mean, the largest previous aftermarket order, I don’t know, maybe there was something a dozen years ago or something that would be profoundly large. I can’t imagine what that would look like. But it was less than $1 million, I can assure you that. We certainly may have booked some pass through some membrane filtration or something, but I’m not aware of anything that’s anywhere close to greater than $1 million in our company history, unless Peter has ever heard of something, and I just don’t think that we’ve come anywhere close to that. This is – by the way, Jim, this is a multiyear aftermarket. Like I think this is – I think this one serves a 3-year contract associated with this different...

This is the first year of a multiyear support agreement. I’ll give you a little color without disclosing customer, it’s a Middle Eastern national oil company with a Korean contractor with the national power company of that organization consuming the gas that’s produced in the facility. And it’s a facility that has both water treatment and it had some gas sweetening as well. So it was two parts of Peerless working in conjunction. This is one of those opportunities that takes a lot of work for multiple people in an organization to pull together; project team, commercial team, our Regional General Manager on-site field service engineers, all building relationships that got these customers comfortable that we were the appropriate supplier of the materials and the service. Now that, that – this is also, we believe, a very important reference case that we can now use to promote these capabilities to other customers in the Gulf region.

Got it. And a follow-up just on some of the investments that you’re making in the newer acquisitions, Wakefield and Transcend. Can you help us with the timing around these investments and the capacity increases and the time line that you expect? Yes. Thank you.

Yes. So the investment in machinery at Transcend has already – the initial investment down payment was made in the second quarter. The machinery will be received in the third quarter, commissioned and up and running. And so a final payment will be made in the third quarter. This is a machine that makes filter element cores critical to the type of filtration designs that the Transcend business utilizes. So that one will be concluded within our existing CapEx budget schedules that we’ve laid out in the next quarter. The Wakefield investment will be made over the next three quarters. There is an investment at its current location to increase the capacity of painting and the quality of painting, and next investment will be to expand on the current site into an additional 22,000 square feet for layout space and for preliminary assembly of components that will feed the final assembly line. Think of it as a fish bone with assembly lines running down and cells where subassembly work is completed, that then gets bolted into a package, that then gets moved out of the shop into a paint bay. That’s on the current site. Then we’ve also make investment in both a new lease and some temporary facilities in an adjacent space, about two kilometers from the existing facility where we can do final fit-out of a completed enclosure and acoustic package, which will triple the capacity for completions of this business. These individual packages were anywhere, depending on how they fit out $0.25 million to $1 million apiece. So they’re not small, little widgets, they look like containers, and they’re highly engineered packages that deliver emergency backup power to data centers and can also be deployed to banks, health care centers, other critical infrastructure.

And Jim, if I could bring it sort of back up a couple of levels, every transaction that Peter and I, the Board, the company, our platform leaders look at. It’s all about growth, right? So we’re – during due diligence, we’re pushing the leadership teams of these acquisitions to come and explain to us how they can double their businesses, right? We believe we’re paying the right multiple for the previous owners and the leadership teams, but we believe that we’re paying the right multiple for us and our investors. And the key is if we can significantly grow these businesses with modest investment and leveraging our core infrastructure, our global teams, our brands, our balance sheets, things that are already inherently in place at CECO, then the return on investment is even stronger. If the forward multiple of our deals ends up being 3x, 4x future EBITDA and the future EBITDA is 18 to 24 months in the future, that’s a tremendous win for our shareholders. It’s already accretive at 7x or so x EBITDA, which has been the average that we’ve paid for the 7x or so acquisitions we’ve made over the last 2 years. But if we can, on a forward-looking basis, reduce that to 3x to 4x and then beyond that, continue to grow and stabilize our business mix and our free cash flow generation, then it’s a home, home, home run for our investors. And so these are really important detailed investments that Peter just outlined, but things that we’ve been looking at through due diligence, none of these are surprises. This is why we’re doing these deals.

Got it. And Peter, you may have given it, I may have missed it. What’s the CapEx for the year and congrats, by the way, on the quarter.

Yes. We think we’ll finish the CapEx to be between $6 million and $6.5 million.

Thank you.

We remain to be a very asset-intensive business with respect to our ability to not have to deploy a lot of CapEx against our core operating. That said, we believe that there’s great opportunities to invest in automation, upgrades on capabilities, machining facilities, just to continue to improve our ability to support growth.

Great. Thank you.

Thanks, Jim.

The next question we have is from Amit Dayal of H.C. Wainright. Please go ahead.

Thank you. Good morning, guys. Can you talk about sales and marketing efforts? You commented that you are not expecting SG&A to trend too much higher. Just wondering what is driving some of these, I guess, this type of positioning, are you seeing more sales from existing customers? Or are there other synergies that are coming into play for you?

When we speak of marketing, I think it’s important to point out, we don’t do much marketing. Our marketing is through – generally through direct sales relationships our commercial teams have with engineering companies, existing customers, consulting engineers, and service companies. So we have a website, we have some brochures, and we have some really good technical sales and business development teams. What you’ll see grow and it grows with our top line is our investment in selling resources and then the project and engineering resources to support the business they bring in. When Todd speaks to SG&A not growing, that’s the G&A aspect – accounting, HR, IT, corporate expenses, corporate overhead, insurance, all those that don’t scale with growth. In fact, those are areas we’re beginning to focus very extensively on how do we refine and improve those costs and get more out of each dollar spent. Todd?

Yes. No, look, I think that’s – you nailed it. This I guess, I don’t know of many industrial companies that I’ve had – I’ve had the pleasure of working for several incredible industrial companies with tremendous leadership positions in my career. And when they’re experiencing in my previous lives, when we’re experiencing growth, it has a whole host of reasons can be new technologies. We’re doing the same thing here at CECO. We’re launching some new products. It’s finding new global markets for our existing products, services, brands, et cetera. We’re doing that here at CECO. And when it comes to doubling the size of your high-growth regions, right, that comes with investing in project management, sales and business development in places like India, East Asia. We’re doing that here at CECO. Acquisitions that we’re making, and then we’re adding some sales capabilities to those businesses in our core CECO legacy regions or adding new salespeople to those new acquisitions so that they can cross-sell our products into their customers into their – we’re doing that here at CECO. So really, Amit, it’s a playbook that’s pretty proven where there’s no one big touch down hail Mary pass. It’s a bunch of small plays that we’re running across the board. So it’s not a significant investment in one or two big things. It’s some thoughtful modest investments across the board.

Thank you, guys. My other questions have already been addressed, so I’ll step out of the queue. Thank you.

Thanks, Amit. Appreciate your support.

Thank you. The last question we have is from Bill Dezellem of Tieton Capital. Please go ahead.

Thank you. Relative to your comment that you’ve had a number of acquisitions that have doubled their revenues in the first 18 months with the company. To what degree is that revenue synergy that you identified with CECO or is it really them on a stand-alone basis being purchased at an inflection point in the company’s history?

It’s kind of a combination, I’d say, Bill. Like you look at the Wakefield acquisition, and obviously, we’ve only had Wakefield since the beginning of the year, but we like the trajectory it’s on. So that would be one example of an acquisition where we feel that trajectory is easily going to meet that forecast of 2x. And while we do invest in Wakefield and we’re able to bring some scale to the business outside of just its core operations, I feel like that’s a decent example, at just good timing and a great team at Wakefield that needed expansion but is doing it really with its customer relationships. Now we’re going to help expand its geographic footprint in the Wakefield business but that’s one where they really have a great market. You look at some of our other acquisitions could be DS21, where we’re able to bring some other things to the table that are outside of that, and we made that acquisition about a year ago or you look at an acquisition like let’s say, even Transcend, which we just recently completed. That’s going to be one where we’re able to leverage the existing CECO global resources to bring it through in other regions that it otherwise wouldn’t have. So it’s a little bit of a blend. We believe that all of our acquisitions have an opportunity just within their core markets to grow significantly but doubling that takes either a little bit of market timing that we feel we positioned with a few or we knew that we had the resources and regions that they didn’t, and we were able to invest in those businesses.

That’s helpful. And then on the – one of the slides highlighted the EBITDA margin. And up to this point, it’s really been hovering around 10.5% plus or minus. What’s holding, up to this point, what’s holding that EBITDA margin in that range rather than allowing it to break out?

Yes. Look, I think we’ve tried to be consistent in the last couple of quarters. We remain confident in both gross margins and EBITDA margins. I’ll use your phrase, sort of breaking out of those ranges that they’re currently at, which is 30% to 31% on the gross margin and, let’s just say, around 10% on the EBITDA margin. And if they’re being held back, I’ve been confident that we’re holding them back by investing in resources for – when we do start to expand margins, it’s a sustainable expansion. I’m not saying nothing is more frustrating than a company that goes from, let’s say, 10% to 12%, and then a year later, it’s back to 9%, 10%. That’s – I’d love to get to 12% tomorrow. Bill, don’t get me wrong. But what I’d really like is to get to 11%, 12% find that as our new floor and then go from 11%, 12%, you start asking me why that’s been stuck for a couple of quarters. And then we break out again, we get to 12%, 13%, 14%. And then we sort of settle in there for a couple of quarters. And then we get from 12%, 13%, 14% to 13%, 14%, 15%. And that’s really what we’re trying to do here. By adding resources now in SG&A in some of our operating excellence programs, we’re just going to get better productivity, more sustainable productivity, put very longer-term efficiency programs in place around lean, putting in great sales and business development people to support our growth, so that we’re not just contracting this stuff out and then losing it. So we have a higher level of investment today, but we’re also growing significantly. We’re going to see those margins expand.

Excellent. So really, the right way to think about it is maybe a little less breakout as much as it will be stair step and moving up in that function. Is that what we’re hearing you say?

If we break out, I sure hope it’s going to just continue to be a stair step, but I think you’re on to it, Bill. Our goal is steady margin expansion that we can sustain.

Okay. And that is a great lead in to my final question, which in the press release, you made the comment that you’re just getting started with more sustained growth and margin expansion. And I’m going to, I guess, hope that you’ll have some additional commentary beyond what you had on the answer to other questions and to the question that I just asked that might help us have more clarity on that on that margin expansion and more sustained growth, I guess, more of what we want to see.

Yes. Look, I guess the color I’d add is that in previous periods, we have shared our current longer-term view that in the next 24 months, we believe that we’ll have doubled the size of the revenue of the company from when I started, it was around $325 million, $350 million. We believe that if we just want to say in the next few years, we’ll have doubled that from where we started to where we’ll be at that point, and it will have taken margins from mid-single digit – or excuse me, high single-digit EBITDA to mid-teens, 14%, 15%, 16% EBITDA margins. We believe that, that – if we can stay or step it up to that. I think if you look at our trailing 12-month orders you’re going to see trailing 12-months orders in the mid-500s. We just gave an updated revenue guidance to be in the low 500s. So our revenue guidance is still below our trailing 12-month future-looking revenue, if you will. And so you can start to look at our mathematical equation associated with where trailing 12-months is and was and where revenue is and is heading, right? Those are pretty good indicators for us is how we think about next year. And I think that the margin expansion is going to also come along with that, especially as Peter really reiterated, our G&A investments remain relatively stable. Yes, our investments in sales, marketing, business development might go up a little bit, but not higher than sales growth goes up. So if we’re able to stabilize G&A, which we expect to get higher gross margins, which we expect to and continue to see double-digit sales growth in the foreseeable future. We like our ability to hit those longer-term targets, and then we’ll reset future longer-term targets from there.

And Todd, did I just hear you say that you would anticipate being there in a couple of years?

We have been pretty consistent, yes, that we sort of call it approximately 2025, whether that’s for the full year or just in that year, that’s our goals and objectives is that we’ll continue our growth to get to those levels. That’s right.

Right. Okay. So essentially, the way to think about this is that you’ve been putting the muscle in place and that has led to some expenses that now you won’t have to do as much. So the future order and revenue growth will flow through to the bottom line more rapidly than it has, not to say it hasn’t since you’ve gone from high single digits to 10-plus percent EBITDA margin. But going from 10 plus to a 15%, that’s a very meaningful swing from that point or from this point forward then.

Yes. And I’m not trying to change the subject here, Bill, for margins. But let’s just talk about dollars for a second because I kind of like dollars. I think we all like currency. We like profitability. We’ll have taken – if we just talk about our guidance, if you take the midpoint, Bill, of our guidance for the full year at $52.5 million. That’s 100% dollars from where we finished 2021, okay? That’s great growth in revenue. That’s phenomenal growth in EBITDA dollars, and some of that comes with investment in infrastructure to support that type of growth. A doubling of the company’s EBITDA dollars and a doubling of the company’s revenue, if we do so from 2020 to 2025 or so comes with not doubling the size of the company’s expenses or corporate headquarters or anything like that. But – so I’m not suggesting that I’m not looking at margins. We are every day. We want to deliver bottom line profitability dollars and I believe that we’re going to get there with margins and productivity and growth rates that are sustainable – but right now, we really are really proud of what we’re delivering, we believe, to our customers, to our shareholders in terms of capabilities and services and solutions, but also it’s translating into dollars, which is our goal.

Ladies and gentlemen, that concludes our question-and-answer session. I would like to turn the conference back over to Todd Gleason for any closing remarks.

Thank you very much. Thanks for the questions and your interest in our information today. As always, we get great questions from our analysts and investors. I’d also like to thank our global teams that are delivering incredible value to our customers as we continue to protect people, protect the environment, and protect our customers’ investments in their industrial equipment. Finally, we’re going to be hosting a number of one-on-one meetings and presenting it to three parts and IDEAS Investor Conference in Chicago this month. We’re going to be active in other conferences as we head into September. We look forward to meeting many of their investors, and we’re out on the road in the next couple of months and including at those conferences, we hope to see you soon. If you have any follow-up questions, you can reach out to us, we’d be happy to address them. And again, thanks, everyone, for your interest, and have a great day.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.