Montrose Environmental(MEG) - 2025 Q2 - Quarterly Results

Earnings Highlights & CEO Commentary 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 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 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 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 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] CEO Commentary 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] - Strong momentum across all three segments and lines of business[5] - 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] Financial Performance Review 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 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] Second Quarter 2025 Detailed Results 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) 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) 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] Adjusted Net Income & Adj EPS (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] Consolidated Adjusted EBITDA (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] First Six Months 2025 Detailed Results 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) 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) 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] Adjusted Net Income & Adj EPS (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] Consolidated Adjusted EBITDA (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] Operating Cash Flow, Liquidity and Capital Resources 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] - Voluntarily fully redeemed all remaining $62.2 million of Series A-2 Preferred Stock on July 1, 2025, using cash on hand and borrowings, resulting in a pro forma leverage ratio of 2.99x[18] Segment Performance This section details the revenue and Adjusted EBITDA performance across Montrose's three reportable segments for both the second quarter and first half of 2025 Segment Revenues and Adjusted EBITDA Analysis Montrose's three reportable segments—Assessment, Permitting and Response; Measurement and Analysis; and Remediation and Reuse—all contributed to strong revenue growth and Adjusted EBITDA expansion in both Q2 and H1 2025, with notable margin improvements in Measurement and Analysis Segment Revenues and Adjusted EBITDA (Q2 2025 vs. Q2 2024) | Segment | Q2 2025 Revenue ($ 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 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 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] - 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] - 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][37] Reconciliation of Net Income (Loss) to Adjusted Net Income 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 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 This section provides essential corporate details, including webcast information, company overview, forward-looking statements disclaimer, and contact information Webcast and Conference Call Details 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] - 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] - Audio replay will be available on the Montrose website for 30 days[20] About Montrose Environmental Group 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] - Employs approximately 3,500 individuals across 120 locations worldwide, combining local knowledge with an integrated approach[21] - Services include air measurement, laboratory services, regulatory compliance, environmental emergency response, permitting, engineering, and remediation[21] Forward-Looking Statements Disclaimer 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] - Statements are based on current information and management's expectations, subject to risks and uncertainties beyond the Company's control[22] - The Company undertakes no obligation to update any forward-looking statement, except as required by applicable law[22] Investor and Media Contacts 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] - Media Relations Contact: Tammy Hovey, Director, Corporate Communications, (917) 520-2751, pr@montrose-env.com[23] Condensed Consolidated Financial Statements 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 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 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 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 |