Montrose Environmental(MEG) - 2022 Q1 - Quarterly Report

FORM 10-Q Filing Information This section presents the official filing information for the Quarterly Report on Form 10-Q, including registrant details and securities registered Registrant Information This section provides key identification details for Montrose Environmental Group, Inc.'s Form 10-Q, including incorporation, executive offices, and stock exchange listing - The filing type is a Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934[2] - The quarterly period ended on March 31, 2022[2] - The registrant name is Montrose Environmental Group, Inc.[2] Securities Registered | Title of each class | Symbol(s) | Name of each exchange on which registered | | :------------------ | :-------- | :---------------------------------------- | | Common Stock, par value $0.000004 per share | MEG | The New York Stock Exchange | - As of May 5, 2022, 29,678,697 shares of common stock, $0.000004 par value per share, were outstanding[4] Table of Contents This section provides an organized listing of all chapters and sub-sections within the report PART I. FINANCIAL INFORMATION This part presents the company's comprehensive financial data, including statements, notes, and management's analysis of operations Item 1. Financial Statements This section presents Montrose Environmental Group, Inc.'s unaudited condensed consolidated financial statements, including position, operations, equity, and cash flows Unaudited Condensed Consolidated Statements of Financial Position Total assets decreased from $833.1 million to $790.2 million, driven by lower cash and accounts receivable, with total liabilities also decreasing Key Financial Position Data (in thousands) | Metric | March 31, 2022 | December 31, 2021 | Change | | :-------------------------------- | :------------- | :---------------- | :----- | | Cash and restricted cash | $93,791 | $146,741 | $(52,950) | | Accounts receivable—net | $81,650 | $98,513 | $(16,863) | | Contract assets | $51,716 | $40,139 | $11,577 | | Total current assets | $238,858 | $293,858 | $(55,000) | | Goodwill | $316,173 | $311,944 | $4,229 | | Total assets | $790,245 | $833,094 | $(42,849) | | Accounts payable and other accrued liabilities | $58,992 | $68,936 | $(9,944) | | Business acquisitions contingent consideration, current | $1,429 | $31,450 | $(30,021) | | Total current liabilities | $99,695 | $147,695 | $(48,000) | | Total liabilities | $321,553 | $363,665 | $(42,112) | | Total stockholders' equity | $315,764 | $316,501 | $(737) | Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss Montrose reported a net loss of $7.5 million for Q1 2022, an improvement from $12.9 million in Q1 2021, driven by lower cost of revenues and favorable contingent consideration changes Key Operations Data (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change (YoY) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :----------- | | Revenues | $134,680 | $133,817 | $863 | | Cost of revenues | $88,386 | $95,316 | $(6,930) | | Selling, general and administrative expense | $41,807 | $25,000 | $16,807 | | Fair value changes in business acquisitions contingent consideration | $(21) | $11,064 | $(11,085) | | Loss from operations | $(7,636) | $(9,359) | $1,723 | | Net loss | $(7,536) | $(12,931) | $5,395 | | Net loss attributable to common stockholders | $(11,636) | $(17,031) | $5,395 | | Net loss per share attributable to common stockholders— Basic and Diluted | $(0.39) | $(0.68) | $0.29 | Unaudited Condensed Consolidated Statements of Convertible and Redeemable Series A-2 Preferred Stock and Stockholders' Equity Stockholders' equity slightly decreased from $316.5 million to $315.8 million, influenced by net loss, stock-based compensation, common stock issuance, and preferred dividends Changes in Stockholders' Equity (in thousands) | Item | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | | Balance—December 31, 2021 | $316,501 | | Net loss | $(7,536) | | Stock-based compensation | $10,425 | | Dividend payment to the Series A-2 preferred shareholders | $(4,100) | | Common stock issued | $429 | | Accumulated other comprehensive income | $45 | | Balance—March 31, 2022 | $315,764 | Unaudited Condensed Consolidated Statements of Cash Flows Montrose experienced a $53.0 million decrease in cash in Q1 2022, with increased cash usage across operating, investing, and financing activities compared to the prior year Consolidated Statement of Cash Flows Data (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change (YoY) | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Net cash used in operating activities | $(18,328) | $(13,913) | $(4,415) | | Net cash used in investing activities | $(15,005) | $(7,398) | $(7,607) | | Net cash used in financing activities | $(19,715) | $(3,087) | $(16,628) | | Change in cash, cash equivalents and restricted cash | $(53,048) | $(24,398) | $(28,650) | | Cash, cash equivalents and restricted cash: End of period | $93,791 | $10,641 | $83,150 | Notes to Unaudited Condensed Consolidated Financial Statements These notes provide detailed disclosures supporting the unaudited condensed consolidated financial statements, offering crucial context on financial reporting and operational activities 1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION Montrose Environmental Group, Inc. is a Delaware-formed environmental services company with approximately 80 offices and over 2,700 employees as of March 31, 2022, serving diverse clients through three segments - Montrose Environmental Group, Inc. was formed in November 2013 in Delaware, with approximately 80 offices across the U.S., Canada, and Australia, and over 2,700 employees as of March 31, 2022[14] - The company provides environmental services through three segments: Assessment, Permitting and Response; Measurement and Analysis; and Remediation and Reuse[15][16][17] - Retroactive adoption of ASC 842 (Leases) effective January 1, 2021, resulted in adjustments: depreciation and amortization expense increased by $1.0 million, other income (expense) increased by $0.3 million, and net loss increased by $1.3 million[19] [2. SUMMARY OF NEW ACCOUNTING PRONOUNCEMENTS](index=7&type=section&id=2.%2