Montrose Environmental(MEG) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial information, management's discussion, market risk, and controls Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Montrose Environmental Group, Inc., including the statements of financial position, operations and comprehensive loss, convertible and redeemable Series A-2 preferred stock and stockholders' equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, revenue recognition, acquisitions, debt, equity, and segment information for the periods ended June 30, 2022 and 2021 Unaudited Condensed Consolidated Statements of Financial Position The company's financial position shows a decrease in total assets and liabilities from December 2021 to June 2022 | ASSETS (in thousands) | June 30, 2022 | December 31, 2021 | | :-------------------- | :------------ | :---------------- | | Cash and restricted cash | $98,414 | $146,741 | | Accounts receivable—net | $87,676 | $98,513 | | Contract assets | $47,740 | $40,139 | | Total current assets | $244,236 | $293,858 | | Goodwill | $315,626 | $311,944 | | Other intangible assets—net | $150,684 | $160,997 | | TOTAL ASSETS | $787,743 | $833,094 | | LIABILITIES & EQUITY (in thousands) | June 30, 2022 | December 31, 2021 | | :-------------------------------- | :------------ | :---------------- | | Accounts payable and other accrued liabilities | $59,285 | $68,936 | | Accrued payroll and benefits | $18,756 | $25,971 | | Business acquisitions contingent consideration, current | $2,814 | $31,450 | | Total current liabilities | $101,293 | $147,695 | | Long-term debt—net | $157,703 | $161,818 | | Total liabilities | $319,964 | $363,665 | | Convertible and Redeemable Series A-2 Preferred Stock | $152,928 | $152,928 | | Total stockholders' equity | $314,851 | $316,501 | | TOTAL LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY | $787,743 | $833,094 | - Total assets decreased by $45.35 million from December 31, 2021, to June 30, 2022, primarily due to a reduction in cash and restricted cash, and accounts receivable[6] - Total liabilities decreased by $43.7 million, largely driven by a significant reduction in current business acquisitions contingent consideration[6] Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss This statement details the company's revenues, expenses, and net loss for the three and six months ended June 30, 2022 and 2021 | (in thousands, except per share data) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | REVENUES | $139,910 | $136,224 | $274,590 | $270,041 | | COST OF REVENUES | $90,429 | $92,104 | $178,815 | $187,420 | | SELLING, GENERAL AND ADMINISTRATIVE EXPENSE | $46,456 | $27,366 | $88,263 | $52,366 | | FAIR VALUE CHANGES IN BUSINESS ACQUISITION CONTINGENCIES | $(3,510) | $12,971 | $(3,531) | $24,035 | | DEPRECIATION AND AMORTIZATION | $12,280 | $9,878 | $24,424 | $21,674 | | LOSS FROM OPERATIONS | $(5,745) | $(6,095) | $(13,381) | $(15,454) | | NET LOSS | $(7,751) | $(13,148) | $(15,287) | $(26,079) | | NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $(11,851) | $(17,248) | $(23,487) | $(34,279) |\n| NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS— BASIC AND DILUTED | $(0.40) | $(0.66) | $(0.79) | $(1.34) | - Revenues increased by 2.7% for the three months ended June 30, 2022, and by 1.7% for the six months ended June 30, 2022, compared to the respective prior periods[7] - Net loss attributable to common stockholders decreased significantly, from $(17.2) million to $(11.9) million for the three months, and from $(34.3) million to $(23.5) million for the six months, primarily due to a gain from fair value changes in business acquisition contingencies and lower interest expense[7] Unaudited Condensed Consolidated Statements of Convertible and Redeemable Series A-2 Preferred Stock and Stockholders' Equity This statement outlines changes in convertible and redeemable preferred stock and stockholders' equity, reflecting net losses and equity transactions | (in thousands, except share data) | Convertible and Redeemable Series A-2 Preferred Stock (Amount) | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders' Equity | | :-------------------------------- | :----------------------------------------------------------- | :------------------------- | :------------------ | :------------------------- | | BALANCE—December 31, 2021 | $152,928 | $464,143 | $(147,678) | $316,501 | | Net loss | — | — | $(7,536) | $(7,536) | | Stock-based compensation | — | $10,425 | — | $10,425 | | Dividend payment to Series A-2 preferred shareholders | — | $(4,100) | — | $(4,100) | | Common stock issued | — | $429 | — | $429 | | Accumulated other comprehensive income | — | — | — | $45 | | BALANCE—March 31, 2022 | $152,928 | $470,897 | $(155,214) | $315,764 | | Net loss | — | — | $(7,751) | $(7,751) | | Stock-based compensation | — | $10,932 | — | $10,932 | | Dividend payment to Series A-2 preferred shareholders | — | $(4,100) | — | $(4,100) | | Common stock issued | — | $54 | — | $54 | | Accumulated other comprehensive loss | — | — | — | $(48) | | BALANCE—June 30, 2022 | $152,928 | $477,783 | $(162,965) | $314,851 | - Total stockholders' equity slightly decreased from $316.5 million at December 31, 2021, to $314.9 million at June 30, 2022, primarily due to net losses and preferred stock dividends, partially offset by stock-based compensation and common stock issuances[9] - The accumulated deficit increased from $(147.7) million to $(163.0) million over the six-month period, reflecting the net losses incurred[9] Unaudited Condensed Consolidated Statements of Cash Flows This statement summarizes the company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2022 and 2021 | (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(15,287) |