A Global Leader in Air Pollution Control Technology2011 ANNUAL REPORT2

OFFICERS AND DIRECTORSEXECUTIVE OFFICERSPhillip DeZwirekChairman2011 ANNUAL REPORTJeff LangChief Executive OfficerTABLE OF CONTENTSExecutive Officers & DirectorsBenton L. CookInside CoverInterim Chief Financial Officerand ControllerCommitment/Vision1Backlog by Industry1CECO Global1Letter to Shareholders2Highlights3ChairmanSuccess Stories4Jeff LangShareholder Information8Item 1:Business2Item 2:Properties27Item 3: Legal Proceedings28Item 5:Market for Registrant’sCommon Equity and RelatedStockholder Matters29Management’s Discussion &Analysis of Financial Condition& Results of Operations30Financial StatementsPhillip DeZwirekChief Executive OfficerArthur CapeDirector of International Sales,Shymac Innovative MarketingFinancial Section (Form 10-K)Item 7:DIRECTORSJason DeZwirekSecretaryFounder and former CEO, Kaboose Inc.Thomas J. FlahertyConsultant and former Chief Operating Officer,Fairchild CorporationRonald E. Krieg, CPARetired Partner, Plante & Moran, PLLCJason MeretskyF-1AttorneyMeretsky Law FirmJonathan PollackPresidentThe JMP Group1Donald A. WrightVice President, SD Homes

COMMITMENT / VISIONOUR COMMITMENTOUR VISION We are committed to excellence in the developmentand design of technologies, equipment and systemsthat enable industries to manufacture products in amanner that ensures environmental responsibilityand facilitates sustainability of the planet.To become the world-class global leader in air pollutioncontrol technology and related product recovery bydelivering exceptional value for our customers,shareholders, employees and communities through: We are committed to helping industries across theglobe maximize their ability to eliminate the emissionof airborne contaminants and pollutants that resultfrom their unique manufacturing processes. We are committed to the innovation process requiredto develop and deliver air pollution control technologysolutions to meet ongoing regulatory and clean airrequirements across unique and diverse industries.BACKLOG OF OUR STRONGDIVERSE INDUSTRY DECEMBER her Significant GrowthImplementing profitable ways to grow globallywith premier air pollution control technology andsolutions in diverse industries. Product, Service, and Project ExcellenceCreating customer successes and buildingcustomer loyalty. Operational ExcellenceRunning smart, lean, best-in-class, innovativeoperating processes in all that we do. Employee DevelopmentInvesting in the training and development of ouremployees and building world-class generalmanagement and leadership.34%25%12%7%4%3%15% Global Market CoverageImproving internal and external sales andmanufacturing resources to expand our globalcustomer base. To uncover new and existingcustomer opportunities in diverse industries. Safety LeadershipA collective organizational commitment to acontinuous focus on learning, implementing andmonitoring the latest in measures to ensure ouremployees work in a safe environment now andinto the future.CECO GLOBALCECO FacilitiesCECO Global Reps1

SHAREHOLDER LETTERDear Fellow Shareholders,2011 was another excellent year in our journey to improveCECO’s performance, product offerings, margin expansion, global sales focus, operational excellence and safety.Our global customers and future customers continue to askfor CECO’s valuable differentiated products and solutions.This is the foundation behind our current and futuresuccesses. SG&A expenses were reduced by 2.2 million. We willfurther streamline these costs in 2012. Looking for waysto run leaner is an ongoing process.CECO employees and managers exceeded substantiallyall of our 2011 targets and made meaningful progress inother key areas. Earnings were at a record high. Grossmargins continued to increase and sales engineeringproductivity was significant. CECO’s safety performancein terms of Total Recordable Incident Rate (TRIR) was oursafest year ever. Safety leadership in all that we do is atthe heart of CECO’s operational excellence processes. Operating margin increased to 9.0% up from 3.6% in2010 which represents a record year for CECO.Our core manufacturing plants are leaner and moreproductive. We are well positioned to support our evolving“insourcing-outsourcing” 50%/50% subcontracting model.We continue to place a greater focus on pricing management and gross margin improvement on every customerproject. We are fine tuning our product portfolio to focuson areas that bring greater customer value and producehigher operating margins.A continued focus is on the enhancement of ourportfolio’s technology to strengthen CECO for global andimproving markets. For over 40 years, CECO has led oursector with many of the best brand names known for highperformance and reliability. The performance of ourbrands allows us to successfully serve large and diverseindustries across the globe.Today, CECO is leaner and more efficient which hasstrengthened our core business and enhanced our grossmargins. Our senior leaders and general managers arewell prepared for CECO’s domestic and global growthopportunities.In 2011, we maintained a critical focus on growth inglobal markets, while reducing our SG&A expenses,consolidating our operations, and managing our workingcapital and cash wisely. Once again our market breadthwas an asset this year. Many key customer industriescontinued to perform well. Our global business modelproved more important than ever producing roughly23.5% of our 2011 sales outside the USA.CECO continues to excel within the global air pollutioncontrol sector while also ensuring our core domesticproducts and services gain market share. Over the nextfew years, our strategic goal is for CECO’s internationaloperations to become equal in size to our domesticrevenues.2011 Financial Particulars Revenue from continuing operations was 139 million,compared to 141 million in 2010. Gross profit from continuing operations increased from23.3% to 27.5%.2 Operating income increased to 12.4 million ascompared to 5.0 million in 2010, which illustratesexcellent progress and showcases management’sability to execute. Annual shop overhead has been reduced 1.5 million,with fewer facilities, assets and real estate obligations. CECO China delivered nearly 20% of our 2011operating income and is positioned favorablyfor growth. Global bookings for 2011 were 24%. Balance sheet is stronger with 12.7 million in cash andcash equivalents. Bank debt was reduced to zero.Our 20 million revolver is still available. The initiation of our first ever quarterly cash dividendwas announced in August. During 2011 dividendsof 0.05 were paid and on March 9, 2012, weannounced a 40% increase in the quarterly dividendto 0.035 per share from the previous quarterlydividend of 0.025 per share.Our FocusCECO is a global leader in air pollution control equipmenttechnologies. Our core expertise is in engineered airpollution control technologies, product recovery andindustrial ventilation systems. We have established ourposition as a premier provider of integrated solutions forglobal air pollution applications. As such, we are wellpositioned for the renewable fuels, gasification andbiomass markets. Our expanding operations in China, Indiaand Brazil will enable us to maximize opportunities in thosegrowing markets.We believe the global air pollution control equipment andservices sectors will grow as a result of increasing demandfor cleaner emissions from global manufacturing facilitiesand new and enhanced air quality regulations and climatechange legislation. This will produce significant demand forCECO’s products over the long term.We are excited about our future, our team, our strategyand our core focus. In 2012, CECO will strive to realize itsvision to:- drive global growth,- achieve lean operational excellence,- expand margins,- ensure service and product quality,- develop our valued employees,- improve our global market coverage,- provide safety leadership.As we continue to move our business forward we plan toshare our progress with you in these important areas.

In SummaryCECO is positioned stronger than ever. We haveexceptional product brands, leaner operations,increased global presence and a proven managementleadership team in place. Our portfolio of businesses isoptimally positioned and running well. A key goal in 2012is to drive greater organic revenue growth and evaluatebolt-on accretive acquisition opportunities. The marketswe serve are gaining momentum and we are expandingglobally. Given CECO’s core product strength, long termgrowth plans and operational excellence, we believe wewill create significant shareholder value as we executeon our vision and strategies. We would like to thank ourmanagement team and employees who have providedthe focus and daily efforts to position CECO to win.Building our Global Technologyand Business PortfolioCECO Environmental has acquired and developed worldclass companies that offer a comprehensive portfolioof air pollution control technologies that provide uniquevalue and custom solutions for our customers across theglobe. In recent years, the company has added manycomplementary businesses that have expanded CECO’scapability and market exposure. Our company hasmade exceptional progress integrating these businessesto strengthen our core. Our companies and their areasof specialization are listed below. Buell FCC provides fluidized catalytic crackingcyclones for refineries worldwide. Global refinerycapacity is expanding. CECO Filters provides fiber bed filters for the chemicalprocessing industry. Its products are manufactured inthe United States and China. Effox-Flextor provides dampers and expansion jointsfor a wide variety of industries, but specializes inequipment for the power industry. Fisher-Klosterman provides cyclones, scrubbers, andother air pollution control equipment, specializing inhigh-temperature and high-pressure processes, suchas gasification. Busch International provides filtration and ventilationsystems to capture emissions from molten metalhandling, specializing in steel and aluminumrolling mills. CECO Abatement provides oxidizers for thetreatment and abatement of organics, particulates,malodorous emissions and acid gases from industrialprocess facilities. The company also provides serviceand maintenance. Kirk & Blum is a diverse high end design buildfabricator active in the automotive, steel, foodprocessing, mining, glass, wood products andalternative fuels markets.Sincerely,Phillip DeZwirekChairmanJeff LangChief Executive Officer2011 CECO Division Highlights All divisions have continued their focus onmaximizing gross margins and cost containmentmeasures. CECO China is continuing to grow throughadditional sales engineers and expanding ourShanghai operations. Expanded sales market coverage in India througha strategic partnership with Empire Industrial Equipment; the largest and most successful equipmentsales, installation and after sales service supplier toindustrial manufacturers across India. Effox-Flextor received four orders in the miningand power markets totaling more than 10 million. Totaling more than 5 million, Busch Internationalreceived three orders for the steel industry. Buell FCC received six orders from the oil refiningmarket totaling more than 14.4 million. Kirk & Blum received four orders, totaling over 5.1 million, from U.S. automotive and sugar refinerycustomers. Our global presence continued to expand for theCECO companies Buell, Effox-Flextor and FisherKlosterman with orders from China, Mexico,Canada, South Korea, Australia, Peru, Saudi Arabia,South Africa, Malaysia, Oman, and Brazil.3

CECO SUCCESS STORIESHighlighting CECO Products and TechnologyBusch InternationalBusch International provides a wide range of air handling systems andproducts to the metals industry. Designing and installing air pollution controlsystems that capture and collect oil mist and fumes generated by metal rolling and finishing operations is a major focus of their business. Busch offers afull range of technologies to meet the environmental requirements for rollingmill fume exhaust. Their systems include high efficiency, low maintenance,collection equipment combined with custom engineered mill hooding andenclosure systems designed to provide effective fume capture and seamlessintegration into the customer’s process lines.Busch was recently selected by a large aluminum producer to provide fumecontrol for their hot rolling process. This photo shows the project which iscurrently under construction at one of their U.S. rolling facilities.This is the second project of its type performed by Busch at the plantwithin the last four years. Prior to the addition of this system, the facilitywas plagued by large quantities of oil mist and fumes inside the plantwhich created health and safety concerns. The scope of work requiredfull collaboration with the customer’s engineering staff to ensure a smoothinstallation with minimal down time at the process line. The finished systemwill result in a more modern appearance to the rolling mill, and a cleanerand safer in-house working environment.Other Busch International products include their patented Jet*Star stripcooling and drying systems, coil cooling systems, self-cleaning ambient airfiltration systems, fugitive emission control systems, and a full line of industrialventilation equipment and systems.CECO FiltersCECO Filters has a long, successful proven track record of providingfiber bed solutions to meet EPA emission standards for the asphaltindustry. CECO Filters was approached by a major roofing manufacturerto recommend a solution to replace an inefficient control technology.Their existing technology was creating mechanical failures, fires, andexceeding operating permit limits. This was a recurring challenge andburden on the plant maintenance team.CECO Filters, with the assistance of sister company Kirk & Blum,designed, fabricated and installed a CECO Fiber Bed Filter systemdesigned for collection efficiency of 99.5% for sub-micron aerosolparticles less than one micron. When tested, the fiber bed unitexceeded the regulatory emissions limits. CECO returned to the siteseveral times after installation to perform visible inspections of the unitand plant personnel expressed only satisfaction with the operation ofthe CECO Fiber Bed unit.This solution is typical of CECO’s commitment to providing serviceand technology know-how before, during, and after installation.Recently other divisions within this company have turned to CECOFilters to provide fiber bed solutions at their facilities.4

CECO SUCCESS STORIESHighlighting CECO Products and TechnologyBuellCECO’s Buell Division designs and supplies cyclones and other process equipment essential to the global oil industry. The cyclones which Buell supplies areintegral to the Fluid Catalytic Cracking (FCC) and ResidFCC (RFCC) processes.These generic processes, in many different forms, are used to convert crude oilinto fuels such as gasoline, diesel, heating oil and other valuable fuel products.Buell’s cyclone collectors are used to recover valuable catalysts that are mixedwith the crude oil to facilitate the cracking and distillation process. Buell is oneof a small select group of suppliers qualified and approved by process licensorsto supply cyclones in accordance with the stringent industry requirements.Buell is proud to have been chosen by Petroperu to design and supplyRegenerator Cyclones and a replacement Regenerator Vessel Head.This project is significant in that Petroperu is returning to Buell to supply replacement cyclones after 25 years of service; the current cyclones were originallysupplied by Buell in 1987. This order also showcases Buell’s capability to supplycomponents other than cyclones to meet the customer’s needs. Closecoordination between Petroperu, the process licensor, Buell’s project personnel and our supplier allowed thefabrication, inspection and acceptance of the equipment to be completed ahead of schedule. In addition tocyclones, Buell supplied a vessel head which was shipped in one piece with insulating refractory already installed.This assured quality and minimized risk for the customer who preassembled the vessel head and cyclones at thejobsite prior to bringing the unit down for repairs.Buell supplies cyclones for projects worldwide. In 2011 they received orders for products and services fromcustomers in China, Mexico, Canada, South Korea, Australia, India, Peru, Saudi Arabia and South Africa.Orders for delivery outside the U.S. accounted for 42% of Buell’s 2011 business. With convenient access to portfacilities and shops in Canada and Shanghai, Buell is well situated to provide quality products to serve theglobal market for refinery cyclones and related equipment.Effox-FlextorEffox-Flextor, CECO’s damper division, is the world leader in the designing andmanufacturing of heavy duty dampers and expansion joints. The equipment thatEffox-Flextor supplies can be found throughout many industries to either isolate orcontrol flue gases within different applications. One industry which has been growingthrough the years is the gas fired power market. With stronger regulations on coal anddecreasing prices for natural gas, numerous companies have expressed interest inproviding electricity using this technology.One market in which Effox-Flextor has had success servicing in the past is the naturalgas compressor stations that utilize recycled heat from the gas turbine used in pipelines to generate electricity. A natural gas pipeline compressor station consists ofa simple-cycle gas turbine driving a natural gas compressor to boost the pipelinepressure. These systems require a diverter damper that can perform well to controlthe flue gas and direct only the required amount to the ORC system. Their diverterdampers are tailor made for this application. The end result is a diverter damper that is stable, meets therequirements of harsh conditions and is able to adequately control the flow of the exhaust of the gas turbine.Through product performance and word of mouth Effox-Flextor has become known as the renowned supplierof diverter dampers for this application. The division has supplied units in British Columbia, Saskatchewan,North Dakota, South Dakota and Minnesota.5

CECO SUCCESS STORIESHighlighting CECO Products and TechnologyFisher-KlostermanFisher-Klosterman turns biomass waste into power. The U.S. government and venturecapitalists are making significant investments in alternative energy projects to dealwith global warming and reduce our dependence on foreign oil. Using biomasswaste to generate power reduces the need for environmentally unfriendly resourcessuch as coal. An alternative energy company in the U.S. has developed a pressurizedcombustion process that uses wood waste to generate electrical thermal energy.The standard systems are designed to generate 1 to 25 MW of power that can beused at the site or sold to the local grid.The level of extremely fine ash particles exhausting from the combustor of a “biomassto energy” facility must be reduced to protect the turbine blades and ensure dependable power generation. The exhaust gas is extremely hot (1400oF to 1800oF) and at ahigh pressure (50 to 70 PSIG). This project requires sophisticated engineering to meetthe requirements of the system. It is a not a simple dust collection application.Fisher-Klosterman was asked to submit a recommendation and a proposal on howto reduce the ash loading. Based on our knowledge and expertise, using a XQ Serieshigh efficiency cyclone was the only viable solution. We designed a cyclone andduct exhaust system that could handle the high pressure, account for the thermalstresses, prevent refractory particles from entering the turbine, and reduce the ashconcentration to an acceptable level for the turbine. We continue to look foropp