[Earnings Highlights & CEO Commentary](index=1&type=section&id=Earnings%20Highlights%20%26%20CEO%20Commentary) Montrose Environmental Group reported strong Q2 and H1 2025 results, leading to increased full-year guidance and strategic capital structure simplification [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Montrose Environmental Group reported a record second quarter in 2025, driven by significant revenue growth, a shift from net loss to net income, and substantial increases in Adjusted Net Income and Consolidated Adjusted EBITDA Second Quarter 2025 Key Financial Highlights (YoY) | Metric | 2025 Value | 2024 Value | Change | Growth % | | :-------------------------------- | :--------- | :--------- | :----- | :------- | | Revenue | $234.5M | $173.3M | +$61.2M | 35.3% | | Net Income (Loss) | $18.4M | ($10.2M) | +$28.6M | N/A | | EPS (Diluted) | $0.42 | ($0.39) | +$0.81 | N/A | | Adjusted Net Income | $27.4M | $10.8M | +$16.6M | 153.7% | | Adj EPS | $0.63 | $0.20 | +$0.43 | 215.0% | | Consolidated Adjusted EBITDA | $39.6M | $23.3M | +$16.3M | 69.8% | | Consolidated Adjusted EBITDA % of Revenue | 16.9% | 13.5% | +340 bps | N/A | [First Half 2025 Highlights](index=1&type=section&id=First%20Half%202025%20Highlights) The first half of 2025 also demonstrated strong performance with significant revenue growth, a substantial reduction in net loss, and robust increases in Adjusted Net Income and Consolidated Adjusted EBITDA, alongside improved operating cash flow and leverage First Half 2025 Key Financial Highlights (YoY) | Metric | 2025 Value | 2024 Value | Change | Growth % | | :-------------------------------- | :--------- | :--------- | :----- | :------- | | Revenue | $412.4M | $328.7M | +$83.7M | 25.5% | | Net Loss | ($1.0M) | ($23.5M) | +$22.5M | N/A | | LPS (Diluted) | ($0.15) | ($0.91) | +$0.76 | N/A | | Adjusted Net Income | $32.7M | $19.3M | +$13.4M | 69.4% | | Adj EPS | $0.73 | $0.37 | +$0.36 | 97.3% | | Consolidated Adjusted EBITDA | $58.6M | $40.2M | +$18.4M | 45.7% | | Consolidated Adjusted EBITDA % of Revenue | 14.2% | 12.2% | +200 bps | N/A | | Operating Cash Flow | $27.4M | ($21.1M) | +$48.5M | N/A | | Leverage Ratio (as of June 30, 2025) | 2.5x | N/A | N/A | N/A | [Increased Full-Year 2025 Guidance](index=1&type=section&id=Increased%20Full-Year%202025%20Guidance) Montrose has raised its full-year 2025 guidance for both Consolidated Adjusted EBITDA and revenue, reflecting strong year-to-date performance Increased Full-Year 2025 Guidance | Metric | New Range | Midpoint Growth (vs. FY2024) | | :----------------------------- | :-------------------------- | :--------------------------- | | Consolidated Adjusted EBITDA | $111.0M - $117.0M | 19% | | Revenue | $795.0M - $835.0M | 17% | [Strategic Capital Allocation Highlights](index=1&type=section&id=Strategic%20Capital%20Allocation%20Highlights) The company successfully redeemed the remaining Series A-2 Preferred Stock, simplifying its capital structure and eliminating future dividends ahead of schedule due to strong financial results - Redeemed remaining **$62.2 million of Series A-2 Preferred Stock** on July 7, 2025, simplifying capital structure and eliminating future Series A-2 dividends six months earlier than expected[3](index=3&type=chunk) [CEO Commentary](index=3&type=section&id=CEO%20Commentary) CEO Vijay Manthripragada expressed strong satisfaction with the company's exceptional performance, highlighting record client engagement, momentum across all segments, and exceeding goals for organic revenue, earnings growth, margin expansion, cash flow, and balance sheet simplification - Business continues to perform exceptionally well with client engagement at all-time highs[5](index=5&type=chunk) - Strong momentum across all three segments and lines of business[5](index=5&type=chunk) - Exceeding goals for organic revenue and earnings growth, margin expansion, and cash flow, achieving balance sheet simplification and leverage objectives six months ahead of schedule[5](index=5&type=chunk) [Financial Performance Review](index=3&type=section&id=Financial%20Performance%20Review) This section reviews Montrose's financial performance, including the updated full-year outlook, detailed Q2 and H1 2025 results, and operating cash flow [Full Year 2025 Outlook](index=3&type=section&id=Full%20Year%202025%20Outlook) Montrose increased its full-year 2025 guidance for Consolidated Adjusted EBITDA and revenue, reflecting confidence in continued strong performance, with these projections not including any benefits from future acquisitions Updated Full-Year 2025 Outlook | Metric | Previous Midpoint | New Midpoint | Increase at Midpoint | | :----------------------------- | :---------------- | :----------- | :------------------- | | Consolidated Adjusted EBITDA | N/A | $114.0M | +$8.0M | | Revenue | N/A | $815.0M | +$45.0M | - The Consolidated Adjusted EBITDA and revenue outlook does not include any benefit from future acquisitions[6](index=6&type=chunk) [Second Quarter 2025 Detailed Results](index=3&type=section&id=Second%20Quarter%202025%20Detailed%20Results) The second quarter of 2025 saw robust financial improvements across all key metrics, driven by strong revenue growth from emergency responses, organic expansion, and acquisitions, coupled with significant margin expansion [Revenue Performance (Q2)](index=3&type=section&id=Revenue%20Performance%20(Q2)) Second quarter revenue increased significantly by 35.3% year-over-year, primarily fueled by a surge in environmental emergency responses, strong organic growth across all segments, and contributions from acquisitions Q2 2025 Revenue Performance | Metric | 2025 Value | 2024 Value | Change | Growth % | | :-------------------------------- | :--------- | :--------- | :----- | :------- | | Total Revenue | $234.5M | $173.3M | +$61.2M | 35.3% | | Incremental Revenue from Environmental Emergency Responses | $35.6M | N/A | N/A | N/A | | Organic Revenue Growth (all segments) | $17.1M | N/A | N/A | N/A | | Contributions from Acquisitions | $9.1M | N/A | N/A | N/A | | Revenue from Environmental Emergency Responses | $48.5M | $12.9M | +$35.6M | 275.9% | [Net Income & EPS (Q2)](index=3&type=section&id=Net%20Income%20%26%20EPS%20(Q2)) Montrose achieved a significant turnaround in Q2 2025, moving from a net loss to a net income, with a substantial improvement in EPS, primarily due to strong revenue growth, margin expansion, and a fair value gain from preferred stock redemption Q2 2025 Net Income & EPS | Metric | 2025 Value | 2024 Value | Change | | :-------------------------------- | :--------- | :--------- | :----- | | Net Income (Loss) | $18.4M | ($10.2M) | +$28.5M | | Diluted EPS (LPS) | $0.42 | ($0.39) | +$0.81 | - Improvement primarily resulted from revenue growth (including organic growth), margin expansion, and a **$10.0 million fair value gain** related to the Series A-2 redemption[8](index=8&type=chunk) [Adjusted Net Income & Adj EPS (Q2)](index=3&type=section&id=Adjusted%20Net%20Income%20%26%20Adj%20EPS%20(Q2)) Adjusted Net Income and Adj EPS saw significant increases in Q2 2025, driven by strong revenue growth, margin expansion, and the Series A-2 redemption, with additional benefits from lower preferred stock dividends Q2 2025 Adjusted Net Income & Adj EPS | Metric | 2025 Value | 2024 Value | Change | | :-------------------- | :--------- | :--------- | :----- | | Adjusted Net Income | $27.4M | $10.8M | +$16.6M | | Adj EPS | $0.63 | $0.20 | +$0.43 | - Increases primarily due to strong revenue growth, margin expansion, and the Series A-2 redemption, with Adj EPS also benefiting from lower dividends on outstanding Series A-2[9](index=9&type=chunk) [Consolidated Adjusted EBITDA (Q2)](index=3&type=section&id=Consolidated%20Adjusted%20EBITDA%20(Q2)) Consolidated Adjusted EBITDA for Q2 2025 grew substantially by 69.8%, with a 340 basis point increase in margin, attributed to higher revenue, organic growth, and significant operating performance improvements across all segments Q2 2025 Consolidated Adjusted EBITDA | Metric | 2025 Value | 2024 Value | Change | Growth % | | :-------------------------------- | :--------- | :--------- | :----- | :------- | | Consolidated Adjusted EBITDA | $39.6M | $23.3M | +$16.3M | 69.8% | | Consolidated Adjusted EBITDA % of Revenue | 16.9% | 13.5% | +340 bps | N/A | - Increase primarily due to higher revenue, including higher organic growth, and margin expansion in all three segments[10](index=10&type=chunk) [First Six Months 2025 Detailed Results](index=3&type=section&id=First%20Six%20Months%202025%20Detailed%20Results) The first six months of 2025 showcased strong financial results, marked by significant revenue growth, a substantial reduction in net loss, and robust increases in Adjusted Net Income and Consolidated Adjusted EBITDA, driven by operational leverage and strategic capital actions [Revenue Performance (H1)](index=3&type=section&id=Revenue%20Performance%20(H1)) First half revenue increased by 25.5% year-over-year, primarily driven by incremental revenue from environmental emergency responses, strong organic growth across all segments, and contributions from acquisitions H1 2025 Revenue Performance | Metric | 2025 Value | 2024 Value | Change | Growth % | | :-------------------------------- | :--------- | :--------- | :----- | :------- | | Total Revenue | $412.4M | $328.7M | +$83.7M | 25.5% | | Incremental Revenue from Environmental Emergency Responses | $33.8M | N/A | N/A | N/A | | Organic Revenue Growth (all segments) | $28.4M | N/A | N/A | N/A | | Contributions from Acquisitions | $22.5M | N/A | N/A | N/A | | Revenue from Environmental Emergency Responses | $62.4M | $28.6M | +$33.8M | 118.2% | [Net Loss & LPS (H1)](index=3&type=section&id=Net%20Loss%20%26%20LPS%20(H1)) Montrose significantly reduced its net loss in H1 2025, improving LPS, primarily due to strong revenue growth, margin expansion, and a fair value gain from the Series A-2 preferred stock redemption, partially offset by increased interest and tax expenses H1 2025 Net Loss & LPS | Metric | 2025 Value | 2024 Value | Change | | :-------------------- | :--------- | :--------- | :----- | | Net Loss | ($1.0M) | ($23.5M) | +$22.5M | | Diluted LPS | ($0.15) | ($0.91) | +$0.77 | - Improvement primarily resulted from revenue growth (including strong organic growth), margin expansion, and a **$9.7 million fair value gain** related to the Series A-2 preferred stock redemption, partially offset by incremental interest and tax expenses[12](index=12&type=chunk) [Adjusted Net Income & Adj EPS (H1)](index=4&type=section&id=Adjusted%20Net%20Income%20%26%20Adj%20EPS%20(H1)) Adjusted Net Income and Adj EPS for the first six months of 2025 increased substantially, driven by strong revenue growth, margin expansion, and the Series A-2 redemption, with Adj EPS also benefiting from lower preferred stock dividends H1 2025 Adjusted Net Income & Adj EPS | Metric | 2025 Value | 2024 Value | Change | | :-------------------- | :--------- | :--------- | :----- | | Adjusted Net Income | $32.7M | $19.3M | +$13.4M | | Adj EPS | $0.73 | $0.37 | +$0.36 | - Increases primarily due to strong revenue growth, margin expansion, and the Series A-2 redemption, with Adj EPS also benefiting from lower dividends on outstanding Series A-2[14](index=14&type=chunk) [Consolidated Adjusted EBITDA (H1)](index=4&type=section&id=Consolidated%20Adjusted%20EBITDA%20(H1)) Consolidated Adjusted EBITDA for H1 2025 grew by 45.7%, with a 200 basis point increase in margin, primarily due to higher revenue across all segments and strong operating performance in the Measurement & Analysis segment H1 2025 Consolidated Adjusted EBITDA | Metric | 2025 Value | 2024 Value | Change | Growth % | | :-------------------------------- | :--------- | :--------- | :----- | :------- | | Consolidated Adjusted EBITDA | $58.6M | $40.2M | +$18.4M | 45.7% | | Consolidated Adjusted EBITDA % of Revenue | 14.2% | 12.2% | +200 bps | N/A | - Increase primarily due to higher revenue in all three segments and strong operating performance in the Measurement & Analysis segment[15](index=15&type=chunk) [Operating Cash Flow, Liquidity and Capital Resources](index=4&type=section&id=Operating%20Cash%20Flow%2C%20Liquidity%20and%20Capital%20Resources) Montrose demonstrated significant improvement in operating cash flow for the first six months of 2025, alongside a healthy liquidity position and a reduced leverage ratio, further enhanced by the full redemption of Series A-2 Preferred Stock Operating Cash Flow & Liquidity (H1 2025) | Metric | 2025 Value | 2024 Value | Change | | :-------------------------------- | :--------- | :--------- | :----- | | Net Cash Provided by Operating Activities | $27.4M | ($21.1M) | +$48.5M | | Leverage Ratio (as of June 30, 2025) | 2.5x | N/A | N/A | | Available Liquidity (as of June 30, 2025) | $242.8M | N/A | N/A | | Cash and Cash Equivalents | $10.5M | N/A | N/A | | Availability on Revolving Line of Credit | $232.3M | N/A | N/A | - The **$48.5 million improvement in operating cash flow** was primarily due to a **$22.5 million increase in earnings** before non-cash items and a **$21.9 million reduction in cash outflow** from improved working capital performance[16](index=16&type=chunk) - Voluntarily fully redeemed all remaining **$62.2 million of Series A-2 Preferred Stock** on July 1, 2025, using cash on hand and borrowings, resulting in a pro forma leverage ratio of **2.99x**[18](index=18&type=chunk) [Segment Performance](index=9&type=section&id=Segment%20Performance) This section details the revenue and Adjusted EBITDA performance across Montrose's three reportable segments for both the second quarter and first half of 2025 [Segment Revenues and Adjusted EBITDA Analysis](index=9&type=section&id=Segment%20Revenues%20and%20Adjusted%20EBITDA%20Analysis) Montrose's three reportable segments—Assessment, Permitting and Response; Measurement and Analysis; and Remediation and Reuse—all contributed to strong revenue growth and Adjusted EBITDA expansion in both Q2 and H1 2025, with notable margin improvements in Measurement and Analysis Segment Revenues and Adjusted EBITDA (Q2 2025 vs. Q2 2024) | Segment | Q2 2025 Revenue ($ thousands) | Q2 2024 Revenue ($ thousands) | Q2 2025 Adj EBITDA ($ thousands) | Q2 2024 Adj EBITDA ($ thousands) | Q2 2025 Adj EBITDA Margin | Q2 2024 Adj EBITDA Margin | | :-------------------------------- | :---------------------------- | :---------------------------- | :------------------------------- | :------------------------------- | :------------------------ | :------------------------ | | Assessment, Permitting and Response | $103,943 | $53,444 | $27,555 | $12,621 | 26.5% | 23.6% | | Measurement and Analysis | $62,795 | $54,812 | $18,298 | $12,359 | 29.1% | 22.5% | | Remediation and Reuse | $67,805 | $65,069 | $10,030 | $8,929 | 14.8% | 13.7% | | **Total Reportable Segments** | **$234,543** | **$173,325** | **$55,883** | **$33,909** | **23.8%** | **19.6%** | Segment Revenues and Adjusted EBITDA (H1 2025 vs. H1 2024) | Segment | H1 2025 Revenue ($ thousands) | H1 2024 Revenue ($ thousands) | H1 2025 Adj EBITDA ($ thousands) | H1 2024 Adj EBITDA ($ thousands) | H1 2025 Adj EBITDA Margin | H1 2024 Adj EBITDA Margin | | :-------------------------------- | :---------------------------- | :---------------------------- | :------------------------------- | :------------------------------- | :------------------------ | :------------------------ | | Assessment, Permitting and Response | $157,063 | $112,024 | $38,127 | $28,901 | 24.3% | 25.8% | | Measurement and Analysis | $121,825 | $100,306 | $32,071 | $18,863 | 26.3% | 18.8% | | Remediation and Reuse | $133,489 | $116,320 | $15,957 | $13,940 | 12.0% | 12.0% | | **Total Reportable Segments** | **$412,377** | **$328,650** | **$86,155** | **$61,704** | **20.9%** | **18.8%** | [Non-GAAP Financial Measures & Reconciliations](index=10&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This section defines Montrose's non-GAAP financial measures and provides detailed reconciliations to their most directly comparable GAAP measures [Explanation of Non-GAAP Measures](index=10&type=section&id=Explanation%20of%20Non-GAAP%20Measures) This section defines Montrose's non-GAAP financial measures, including Consolidated Adjusted EBITDA, Adjusted Net Income, and Basic/Diluted Adj EPS, explaining their purpose for management and investors while also outlining their inherent limitations and the importance of reviewing them alongside GAAP results - **Consolidated Adjusted EBITDA** is calculated as net income (loss) before interest, income tax, depreciation, and amortization, adjusted for stock-based compensation and acquisition-related costs[35](index=35&type=chunk) - **Adjusted Net Income** is net income (loss) before amortization of intangible assets, stock-based compensation, fair value changes in financial instruments and contingent earnouts, discontinued specialty lab, and other gains/losses[35](index=35&type=chunk) - These non-GAAP measures are used by management to evaluate financial performance, compare to peers, assess business strategies, and make budgeting decisions, but have limitations and should not be considered alternatives to GAAP measures[36](index=36&type=chunk)[37](index=37&type=chunk) [Reconciliation of Net Income (Loss) to Adjusted Net Income](index=11&type=section&id=Reconciliation%20of%20Net%20Income%20(Loss)%20to%20Adjusted%20Net%20Income) This section provides a detailed reconciliation of GAAP Net Income (Loss) to Adjusted Net Income for the three and six months ended June 30, 2025 and 2024, outlining specific adjustments made for non-cash and non-recurring items Reconciliation of Net Income (Loss) to Adjusted Net Income (In thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $18,356 | ($10,170) | ($1,003) | ($23,527) | | Amortization of intangible assets | 7,326 | 7,137 | 15,716 | 14,566 | | Stock-based compensation | 10,834 | 11,831 | 24,557 | 23,103 | | Acquisition costs | 325 | 1,082 | 1,036 | 3,607 | | Fair value changes in financial instruments | (9,256) | 1,202 | (8,040) | 905 | | Expenses related to financing transactions | 297 | 95 | 274 | 239 | | Fair value changes in business acquisition contingencies | 354 | 136 | 831 | 242 | | Discontinued Specialty Lab | — | — | — | 596 | | Other losses and expenses | 156 | 30 | 1,211 | 511 | | Tax effect of adjustments | (1,018) | (543) | (1,873) | (922) | | **Adjusted Net Income** | **$27,374** | **$10,800** | **$32,709** | **$19,320** | | Preferred dividends Series A-2 | (1,400) | (2,750) | (4,150) | (5,564) | | **Adjusted Net Income attributable to stockholders** | **$25,974** | **$8,050** | **$28,559** | **$13,756** | | Diluted Adjusted Net Income per share | $0.63 | $0.20 | $0.73 | $0.37 | [Reconciliation of Net Income (Loss) to Consolidated Adjusted EBITDA](index=12&type=section&id=Reconciliation%20of%20Net%20Income%20(Loss)%20to%20Consolidated%20Adjusted%20EBITDA) This section presents a detailed reconciliation of GAAP Net Income (Loss) to Consolidated Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024, highlighting adjustments for non-cash expenses and other non-operating items Reconciliation of Net Income (Loss) to Consolidated Adjusted EBITDA (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $18,356 | ($10,170) | ($1,003) | ($23,527) | | Interest expense | 4,768 | 3,976 | 9,833 | 7,282 | | Income tax expense | 988 | 2,619 | 3,859 | 3,112 | | Depreciation and amortization | 12,763 | 12,515 | 26,057 | 24,168 | | **EBITDA** | **$36,875** | **$8,940** | **$38,746** | **$11,035** | | Stock-based compensation | 10,834 | 11,831 | 24,557 | 23,103 | | Acquisition costs | 325 | 1,082 | 1,036 | 3,607 | | Fair value changes in financial instruments | (9,256) | 1,202 | (8,040) | 905 | | Expenses related to financing transactions | 297 | 95 | 274 | 239 | | Fair value changes in business acquisition contingencies | 354 | 136 | 831 | 242 | | Discontinued Specialty Lab | — | — | — | 596 | | Other losses and expenses | 156 | 30 | 1,211 | 511 | | **Consolidated Adjusted EBITDA** | **$39,585** | **$23,316** | **$58,615** | **$40,238** | [Corporate Information](index=5&type=section&id=Corporate%20Information) This section provides essential corporate details, including webcast information, company overview, forward-looking statements disclaimer, and contact information [Webcast and Conference Call Details](index=5&type=section&id=Webcast%20and%20Conference%20Call%20Details) Montrose Environmental Group will host a webcast and conference call on August 7, 2025, to discuss its second quarter results, providing access details for live participation and replay - Webcast and conference call scheduled for **Thursday, August 7, 2025, at 8:30 a.m. Eastern Time**[20](index=20&type=chunk) - Live webcast available in the Investors section of www.montrose-env.com; dial-in options provided for live call **(800) 715-9871 or +1 (646) 307-1963, Conference ID: 8690520**[20](index=20&type=chunk) - Audio replay will be available on the Montrose website for 30 days[20](index=20&type=chunk) [About Montrose Environmental Group](index=5&type=section&id=About%20Montrose%20Environmental%20Group) Montrose is a leading environmental solutions company dedicated to helping organizations address current and future environmental challenges, offering integrated design, engineering, and operational services globally - Montrose is a leading environmental solutions company focused on supporting commercial and government organizations[21](index=21&type=chunk) - Employs approximately **3,500 individuals across 120 locations worldwide**, combining local knowledge with an integrated approach[21](index=21&type=chunk) - Services include air measurement, laboratory services, regulatory compliance, environmental emergency response, permitting, engineering, and remediation[21](index=21&type=chunk) [Forward-Looking Statements Disclaimer](index=5&type=section&id=Forward-Looking%20Statements%20Disclaimer) This section serves as a standard disclaimer, informing readers that the press release contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially, and the company undertakes no obligation to update them - Press release contains forward-looking statements identified by words like 'intend,' 'expect,' and 'may'[22](index=22&type=chunk) - Statements are based on current information and management's expectations, subject to risks and uncertainties beyond the Company's control[22](index=22&type=chunk) - The Company undertakes no obligation to update any forward-looking statement, except as required by applicable law[22](index=22&type=chunk) [Investor and Media Contacts](index=5&type=section&id=Investor%20and%20Media%20Contacts) Contact information is provided for investor relations and media inquiries - Investor Relations Contact: Adrianne D. Griffin, Senior Vice President, Investor Relations and Treasury, **(949) 988-3383, ir@montrose-env.com**[23](index=23&type=chunk) - Media Relations Contact: Tammy Hovey, Director, Corporate Communications, **(917) 520-2751, pr@montrose-env.com**[23](index=23&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents Montrose Environmental Group's unaudited condensed consolidated statements of operations, financial position, and cash flows for the specified periods [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section presents the unaudited condensed consolidated statements of operations and comprehensive loss for Montrose Environmental Group, Inc. for the three and six months ended June 30, 2025 and 2024, detailing revenues, expenses, and net income (loss) Condensed Consolidated Statements of Operations and Comprehensive Loss (In thousands) | | | | Three Months Ended June 30, | | | | Six Months Ended June 30, | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2025 | | 2024 | | 2025 | | 2024 | | Revenues | $ | 234,543 | $ | 173,325 | $ | 412,377 | $ | 328,650 | | Cost of revenues (exclusive of depreciation and amortization | | 132,802 | | 104,086 | | 241,208 | | 200,643 | | shown below) | | | | | | | | | | Selling, general and administrative expense | | 73,683 | | 59,239 | | 139,915 | | 116,313 | | Fair value changes in business acquisition contingencies | | 354 | | 136 | | 831 | | 242 | | Depreciation and amortization | | 12,763 | | 12,515 | | 26,057 | | 24,168 | | Income (loss) from operations | | 14,941 | | (2,651) | | 4,366 | | (12,716) | | Other income (expense), net | | 9,171 | | (924) | | 8,323 | | (417) | | Interest expense, net | | (4,768) | | (3,976) | | (9,833) | | (7,282) | | Total other income (expense), net | | 4,403 | | (4,900) | | (1,510) | | (7,699) | | Income (loss) before expense from income taxes | | 19,344 | | (7,551) | | 2,856 | | (20,415) | | Income tax expense | | 988 | | 2,619 | | 3,859 | | 3,112 | | Net income (loss) | $ | 18,356 | $ | (10,170) | $ | (1,003) | $ | (23,527) | | Equity adjustment from foreign currency translation | | (1,258) | | 35 | | (1,611) | | — | | Comprehensive income (loss) | | 17,098 | | (10,135) | | (2,614) | | (23,527) | | Convertible and redeemable series A-2 preferred stock dividend | | (1,400) | | (2,750) | | (4,150) | | (5,564) | | Net income (loss) attributable to common stockholders | | 16,956 | | (12,920) | | (5,153) | | (29,091) | | Weighted average common shares outstanding | | | | | | | | | | Basic | | 35,206 | | 33,318 | | 34,855 | | 31,850 | | Diluted | | 43,455 | | 33,318 | | 34,855 | | 31,850 | | Net income (loss) per share attributable to common stockholders | | | | | | | | | | Basic | $ | 0.48 | $ | (0.39) | $ | (0.15) | $ | (0.91) | | Diluted | $ | 0.42 | $ | (0.39) | $ | (0.15) | $ | (0.91) | [Condensed Consolidated Statements of Financial Position](index=7&type=section&id=Statements%20of%20Financial%20Position) This section presents the unaudited condensed consolidated statements of financial position for Montrose Environmental Group, Inc. as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Statements of Financial Position (In thousands) | | | June 30, | | December 31, | | --- | --- | --- | --- | --- | | | | 2025 | | 2024 | | Assets | | | | | | Current assets | | | | | | Cash, cash equivalents and restricted cash | $ | 10,484 | $ | 12,935 | | Accounts receivable, net | | 160,004 | | 158,883 | | Contract assets | | 75,313 | | 52,091 | | Prepaid and other current assets | | 15,117 | | 14,090 | | Total current assets | | 260,918 | | 237,999 | | Non-current assets | | | | | | Property and equipment, net | | 61,122 | | 63,776 | | Operating lease right-of-use asset, net | | 37,706 | | 39,755 | | Finance lease right-of-use asset, net | | 23,825 | | 19,643 | | Goodwill | | 468,981 | | 467,789 | | Other intangible assets, net | | 139,844 | | 152,756 | | Other assets | | 5,688 | | 8,635 | | Total assets | $ | 998,084 | $ | 990,353 | | Liabilities, Convertible and Redeemable Series A-2 Preferred Stock and Stockholders' | | | | | | Equity | | | | | | Current liabilities | | | | | | Accounts payable and other accrued liabilities | $ | 66,647 | $ | 63,704 | | Accrued payroll and benefits | | 37,305 | | 34,248 | | Business acquisitions contingent consideration, current | | 17,284 | | 26,872 | | Current portion of operating lease liabilities | | 11,355 | | 11,345 | | Current portion of finance lease liabilities | | 5,483 | | 4,627 | | Current portion of long-term debt | | 8,688 | | 17,866 | | Total current liabilities | | 146,762 | | 158,662 | | Non-current liabilities | | | | | | Business acquisitions contingent consideration, long-term | | 7,346 | | 6,255 | | Other non-current liabilities | | 7,052 | | 5,550 | | Deferred tax liabilities, net | | 16,414 | | 13,312 | | Conversion option related to Series A-2 Preferred Stock | | 10,552 | | 20,224 | | Operating lease liability, net of current portion | | 28,853 | | 30,880 | | Finance lease liability, net of current portion | | 12,490 | | 11,460 | | Long-term debt, net of deferred financing fees | | 264,555 | | 204,818 | | Total liabilities | $ | 494,024 | $ | 451,161 | | Commitments and contingencies | | | | | | Convertible and redeemable series A-2 preferred stock $0.0001 par value | | | | | | Authorized, issued and outstanding shares: 5,834 and 11,667 at June 30, 2025 and December 31, | | | | | | 2024, respectively; aggregate liquidation preference of $62.2 million and $122.2 million June | | 33,792 | | 92,928 | | 30, 2025 and December 31, 2024, respectively | | | | | | Stockholders' equity: | | | | | | Common stock, $0.000004 par value; authorized shares: 190,000,000 at June 30, 2025 and | | | | | | December 31, 2024; issued and outstanding shares: 35,272,236 and 34,309,788 at June 30, | | — | | — | | 2025 and December 31, 2024, respectively | | | | | | Additional paid-in-capital | | 747,685 | | 721,067 | | Accumulated deficit | | (273,673) | | (272,670) | | Accumulated other comprehensive loss | | (3,744) | | (2,133) | | Total stockholders' equity | | 470,268 | | 446,264 | | Total liabilities, convertible and redeemable series A-2 preferred stock and stockholders' equity | $ | 998,084 | $ | 990,353 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Statements%20of%20Cash%20Flows) This section presents the unaudited condensed consolidated statements of cash flows for Montrose Environmental Group, Inc. for the six months ended June 30, 2025 and 2024, detailing cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (In thousands) | | | | For the Six Months Ended June 30, | | | --- | --- | --- | --- | --- | | | | 2025 | | 2024 | | Operating activities: | | | | | | Net loss | $ | (1,003) | $ | (23,527) | | Adjustments to reconcile net loss to net cash provided by operating activities: | | | | | | Provision (recovery) for credit loss | | 5,482 | | (659) | | Depreciation and amortization | | 26,057 | | 24,168 | | Non-cash leases expense | | 6,119 | | 5,429 | | Stock-based compensation expense | | 24,557 | | 23,103 | | Fair value changes in financial instruments | | (8,040) | | 905 | | Write off of deferred financing costs | | 913 | | — | | Deferred income taxes | | 3,557 | | 3,152 | | Other operating activities, net | | 1,671 | | 723 | | Changes in operating assets and liabilities, net of acquisitions: | | | | | | Accounts receivable and contract assets | | (27,379) | | (38,021) | | Prepaid expenses and other current assets | | (1,124) | | (1,152) | | Accounts payable and other accrued liabilities | | (793) | | (938) | | Accrued payroll and benefits | | 3,057 | | (7,940) | | Change in operating leases | | (5,676) | | (6,306) | | Other assets | | — | | (64) | | Net cash provided by (used in) operating activities | $ | 27,398 | $ | (21,127) | | Investing activities: | | | | | | Proceeds from corporate owned and property insurance | | — | | 120 | | Purchases of property and equipment | | (5,117) | | (17,928) | | Proceeds from the sale of property and equipment | | 39 | | 2,069 | | Proprietary software development and other software costs | | (2,804) | | (1,736) | | Purchase price true ups | | (50) | | — | | Minority investments | | — | | (210) | | Cash paid for acquisitions, net of cash acquired | | — | | (70,252) | | Net cash used in investing activities | $ | (7,932) | $ | (87,937) | | Financing activities: | | | | | | Proceeds from revolving line of credit | | 216,025 | | 202,771 | | Repayment of the revolving line of credit | | (174,671) | | (199,119) | | Repayment of aircraft loan | | (564) | | (526) | | Proceeds from term loan | | 200,000 | | 50,000 | | Repayment of term loan | | (189,219) | | (3,906) | | Payment of contingent consideration and other purchase price true ups | | (4,400) | | (525) | | Repayment of finance leases | | (6,070) | | (3,105) | | Payments of deferred financing costs | | (2,189) | | (348) | | Proceeds from issuance of common stock for exercised stock options | | 77 | | 1,375 | | Proceeds from issuance of common stock in follow-on offering, net of issuance costs | | — | | 121,776 | | Proceeds from building sale leaseback | | 2,500 | | — | | Dividend payment to the series A-2 stockholders | | (2,750) | | (5,564) | | Redemption of series A-2 preferred stock | | (60,000) | | (60,000) | | Net cash provided by (used in) financing activities | $ | (21,261) | $ | 102,829 | | Change in cash, cash equivalents and restricted cash | | (1,795) | | (6,235) | | Foreign exchange impact on cash balance | | (656) | | (100) | | Cash, cash equivalents and restricted cash: | | | | | | Beginning of year | | 12,935 | | 23,240 | | End of period | $ | 10,484 | $ | 16,905 |

Our latest available data shows that MEG has returned about 10.9% since the start of the calendar year. Meanwhile, the Business Services sector has returned an average of -1.2% on a year-to-date basis. This shows that Montrose Environmental is outperforming its peers so far this year. One other Business Services stock that has outperformed the sector so far this year is Nomura Research Institute (NRILY) . The stock is up 38.4% year-to-date. The Business Services group has plenty of great stocks, but investo ...

Group 1 - Montrose Environmental (MEG) shares have increased by 2.1% over the past four weeks, closing at $22.39, with a mean price target of $29.4 indicating a potential upside of 31.3% [1] - The mean estimate consists of five short-term price targets with a standard deviation of $4.83, where the lowest estimate is $24.00 (7.2% increase) and the highest is $35.00 (56.3% increase) [2] - Analysts show a consensus that MEG will report better earnings than previously estimated, which is a positive indicator for potential stock upside [4][11] Group 2 - The Zacks Consensus Estimate for MEG has increased by 4.7% due to two upward revisions in earnings estimates over the last 30 days, with no negative revisions [12] - MEG holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, suggesting strong potential for near-term upside [13] - While consensus price targets may not be reliable for predicting the extent of MEG's gains, they can provide a directional guide for price movement [14]

Core Viewpoint - Montrose Environmental (MEG) has shown a slight increase in share price, but analysts suggest there is significant upside potential based on price targets and earnings estimates [1][11]. Price Targets - The mean price target for MEG is $28.83, indicating a potential upside of 25.4% from the current price of $22.99 [1]. - Price targets from analysts range from a low of $18.00 to a high of $35.00, with a standard deviation of $6.55, reflecting variability in estimates [2]. - The lowest estimate suggests a decline of 21.7%, while the highest indicates a potential upside of 52.2% [2]. Analyst Consensus and Earnings Estimates - Analysts have shown increasing optimism regarding MEG's earnings prospects, with a strong agreement in revising EPS estimates higher [11]. - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 4.7%, with one estimate moving higher and no negative revisions [12]. - MEG holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13]. Caution on Price Targets - Solely relying on consensus price targets for investment decisions may not be prudent, as analysts' ability to set accurate targets has been questioned [3][10]. - Analysts often set optimistic price targets influenced by business relationships, which can lead to inflated estimates [8]. - A low standard deviation among price targets indicates a high degree of agreement among analysts, which can be a starting point for further research [9].

Core Viewpoint - Montrose Environmental (MEG) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook driven by an upward trend in earnings estimates [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of earnings estimate revisions, which are strongly correlated with near-term stock price movements [4][6]. - Institutional investors often rely on earnings estimates to determine the fair value of stocks, leading to significant buying or selling actions that affect stock prices [4]. Company Performance Indicators - Montrose Environmental is projected to earn $0.94 per share for the fiscal year ending December 2025, showing no year-over-year change [8]. - Over the past three months, the Zacks Consensus Estimate for Montrose Environmental has increased by 143%, reflecting a positive trend in earnings outlook [8]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a "Strong Buy" rating, indicating superior earnings estimate revisions and potential for market-beating returns [9][10].

Core Viewpoint - Strathcona Resources Ltd. has successfully closed its Montney asset sales for a total value of approximately $2.86 billion, transitioning to a pure-play heavy oil company with plans for significant production growth by 2031 [1][2]. Group 1: Asset Sales and Financial Position - The total value of the Montney asset sales is approximately $2.86 billion, including closing adjustments, with the Groundbirch asset sale closing on June 1, 2025, and the Kakwa and Grande Prairie assets closing on July 2, 2025 [1][6]. - Strathcona is now producing approximately 120 Mbbls/d (100% oil) and aims to grow production to 195 Mbbls/d by 2031, supported by a 50-year 2P reserves life index [2][20]. - The company currently holds approximately $200 million in positive net cash and marketable securities after debt deductions, which includes shares in Tourmaline Oil Corp. and MEG Energy Corp. [2][13]. Group 2: Strategic Alternatives and Engagement with MEG - Strathcona expressed disappointment over the MEG Board's lack of dialogue regarding its original offer submitted on April 28, 2025, despite the board's decision to pursue a strategic alternatives process [3][4]. - Feedback from MEG shareholders indicates a desire for the MEG Board to engage with Strathcona to explore mutually beneficial outcomes [4][20]. - Strathcona remains committed to engaging with MEG shareholders ahead of the September 15 tender deadline for its offer to acquire MEG shares [4][7]. Group 3: Company Overview - Strathcona is recognized as one of North America's fastest-growing oil and gas producers, focusing on thermal oil and enhanced oil recovery through innovative growth strategies [5]. - The company's common shares are listed on the Toronto Stock Exchange under the symbol SCR [5].

Group 1: Offer and Strategic Process - Strathcona Resources Ltd. has responded to MEG Energy Corp.'s Board of Directors' circular regarding Strathcona's offer to acquire all outstanding MEG shares not already owned by Strathcona [1] - Strathcona supports MEG's decision to initiate a strategic alternatives process and encourages the Board to explore other acquisition proposals [2][5] - Strathcona is prepared to engage constructively with MEG's Board during this strategic alternatives process [3] Group 2: Offer Details - Strathcona's offer includes 0.62 of a common share in Strathcona plus C$4.10 in cash for each MEG share [7] - The offer is open for acceptance until 5:00 p.m. Mountain Time on September 15, 2025 [7] Group 3: Company Position and Benefits - Strathcona believes its offer creates a win-win situation for both MEG and Strathcona shareholders, forming a new Canadian oil champion with significant accretion on key metrics [5] - The combined entity would be the only 100% oil company in North America with an investment-grade balance sheet and a 50-year reserves life index [5][6] - Strathcona asserts it is uniquely positioned to achieve an immediate investment-grade credit rating upgrade and join major Canadian oil and gas stock indexes post-transaction [6] Group 4: Company Overview - Strathcona is recognized as one of North America's fastest-growing oil producers, focusing on thermal oil and enhanced oil recovery [8]

Summary of Montrose Environmental Group (MEG) FY Conference Call Company Overview - **Company**: Montrose Environmental Group (MEG) - **Industry**: Environmental Solutions - **Segments**: Consulting, Testing, and Remediation - **Core Focus**: Addressing environmental challenges related to air, water, and soil quality [2][7] Key Points and Arguments Growth and Financial Performance - **Organic Growth**: Core organic growth was high single digits last year and is expected to remain in the same range this year [3][10] - **Revenue Growth**: Since its IPO in 2020, MEG has been growing approximately 25% annually, with organic growth contributing about 13% [10][15] - **Customer Retention**: The company boasts a 96% retention rate of revenue from existing clients, indicating strong customer loyalty [11] - **Cross-Selling Opportunities**: Only 2% of the 6,000 customers use more than two services, highlighting significant potential for cross-selling [13] Market Position and Strategy - **Unique Service Integration**: MEG is noted for its unique combination of consulting, testing, and treatment services, which 85% of surveyed clients expressed interest in [8] - **Client Base**: Primarily serves private sector clients, including Fortune 500 companies, which is relatively unique in the industry [8] - **Intellectual Property**: The company holds 24 patents and is leveraging software and machine learning to enhance service offerings [9] Regulatory Environment and Political Dynamics - **Tailwinds from Regulations**: The current administration's policies are creating more tailwinds than headwinds for MEG, contrary to expectations [17][19] - **Bipartisan Support**: There is broad bipartisan support for environmental regulations, which are not in political crosshairs, ensuring continued demand for MEG's services [19] - **Impact of PFAS Regulations**: Recent clarity on PFAS regulations has led to increased client activity and demand for MEG's services [36][38] Financial Outlook - **Revenue and EBITDA Growth**: The company expects organic revenue growth of 7-9% and organic EBITDA growth to exceed that rate [22] - **Cash Flow**: Anticipated improvement in cash flow conversion above 50% of adjusted EBITDA [26] - **Margin Improvement**: Operating margins are expected to improve due to operating leverage and optimization of processes [27] Acquisition Strategy - **Pause on Acquisitions**: MEG is currently pausing acquisitions to focus on internal operations and optimizing its business structure [24][25] - **Future Acquisition Potential**: The company plans to resume acquisitions when strategically beneficial, supported by a strong balance sheet [25] Additional Important Insights - **Federal Revenue Exposure**: MEG's exposure to US federal revenue is low, around 2.5-3%, minimizing the impact of federal spending cuts [51] - **Market Dynamics**: The company is experiencing growth in its international business, which represents about 20% of total revenue, particularly in Canada, Europe, and Australia [21] - **Client Behavior**: Clients are maintaining their strategies and not significantly altering their approaches despite political changes, which is encouraging for MEG's outlook [18][68] This summary encapsulates the key points discussed during the Montrose Environmental Group FY Conference Call, highlighting the company's growth trajectory, market position, regulatory environment, and financial outlook.

Core Insights - Montrose Environmental Group, Inc. is dedicated to protecting air, water, and soil while promoting environmental stewardship and economic development [1] - The company will present at the William Blair 45th Annual Growth Stock Conference on June 4, 2025, at 5:00 p.m. Eastern Time, with a live audio webcast available [1] - Montrose will provide a copy of its presentation on its website prior to the conference [1] Company Overview - Montrose is a leading environmental solutions company with approximately 3,400 employees across 120 locations globally [2] - The company offers a range of services including air measurement, laboratory services, regulatory compliance, environmental emergency response, permitting, engineering, and remediation [2] - Montrose combines local knowledge with an integrated approach to effectively meet the unique requirements of each project [2]

Core Viewpoint - Strathcona Resources Ltd. has initiated an offer to acquire all outstanding common shares of MEG Energy Corp. for a combination of Strathcona shares and cash, reflecting a strategic move to consolidate its position in the oil and gas sector [1][2]. Offer Details - The offer consists of 0.62 Strathcona shares and $4.10 in cash for each MEG share [1]. - The offer is open for acceptance until September 15, 2025, at 5 p.m. Mountain Time [2]. - The offer is subject to conditions including the deposit of more than 50% of MEG shares and obtaining necessary regulatory approvals [6][7]. Equity Commitment - Strathcona has secured an equity commitment from Waterous Energy Fund, which holds 79.6% of Strathcona shares, to purchase an additional 21.4 million shares at $30.92 each, totaling approximately $662 million [3][4]. - This investment is noted as the largest single investment in the Canadian upstream oil and gas sector since 2014 [4]. Shareholder Approval - Strathcona anticipates issuing up to 145 million shares as part of the offer, which represents about 68% of its outstanding shares [17]. - The issuance of approximately 169.3 million shares requires shareholder approval, which has been obtained through written consent from WEF [18][19]. Strategic Intent - The company aims to acquire any MEG shares not deposited under the offer through compulsory acquisition or other means, reinforcing its strategy to integrate MEG as a wholly-owned subsidiary [8]. - The completion of the WEF III equity investment is expected by July 13, 2025, and is not a condition for the offer [16]. Advisors and Communications - Scotiabank and TD Securities are acting as exclusive financial advisors, while legal counsel includes Blake, Cassels & Graydon LLP and Skadden, Arps, Slate, Meagher & Flom LLP [21]. - Laurel Hill Advisory Group has been engaged as a strategic communications advisor and information agent for the offer [22].