Montrose Environmental Group Reports Record Fourth Quarter and Full Year 2024 Results and Provides Strong 2025 Guidance

Fourth Quarter 2024 Highlights (comparisons to fourth quarter 2023)

• Highest-ever quarterly revenue of $189.1 million, an increase of $21.3 million, or 14.1%
• Net loss of $28.2 million, or $0.90 net loss per diluted share attributable to common stockholders (LPS), and Adjusted Net Income¹ of $14.7 million, or $0.29 Diluted Adjusted Net Income per share¹ (Adj EPS)
• Record fourth quarter Consolidated Adjusted EBITDA¹ of $27.2 million, an increase of $9.8 million, or 55.8%
• Expansion in Consolidated Adjusted EBITDA¹ as a percentage of revenue to 14.4%

Full Year 2024 Highlights (comparisons to full year 2023)

• Record total revenue of $696.4 million, an increase of $72.2 million, or 11.6% over the prior year record
• Net loss of $62.3 million, or $2.22 LPS, and Adjusted Net Income¹ of $55.8 million, or $1.08 Adj EPS¹
• Record Consolidated Adjusted EBITDA¹ of $95.8 million, an increase of $17.2 million, or 21.9%
• Robust expansion in Consolidated Adjusted EBITDA¹ as a percentage of Revenue to 13.8%
• Resilient organic revenue growth of 8.3%
• Continued balance sheet strength, with a leverage ratio of 2.1x as of December 31, 2024

2025 Guidance

• Revenue is expected to be in the range of $735.0 million to $785.0 million
• Reiterates organic revenue growth expectations of 7% to 9% per year
• Consolidated Adjusted EBITDA¹ is expected to be in the range of $101.0 million to $108.0 million
• Focus on continued margin expansion and significantly improved operating cash flow
• Revenue and Consolidated Adjusted EBITDA¹ outlooks do not include any benefit from future acquisitions

LITTLE ROCK, Ark., Feb. 26, 2025 /PRNewswire/ -- Montrose Environmental Group, Inc. (the "Company," "Montrose" or "MEG") (NYSE: MEG) today announced results for the fourth quarter and full year ended December 31, 2024.

Montrose Chief Executive Officer and Director, Vijay Manthripragada, commented, "We are pleased to report another record year and record quarter of financial and operating performance driven by continued demand for our uniquely integrated environmental expertise and technology. Our continued track record of strong organic growth primarily due to cross-selling success and strong customer retention, our increased margins due to improved operating efficiencies, our lower leverage due to balance sheet strength, our continued innovation success with developing patented technologies, and our successful integration of recent acquisitions, all continue to validate the strategic advantages of our business model. Our end-market and service diversification and our focus on simultaneously supporting economic value creation and environmental stewardship continues to resonate. We believe the new US administration and the expected political and policy shifts in our key markets will create more tailwinds than headwinds given our private sector focus and given potential increases in demand for our services due to onshoring and increased energy and industrial production." 

Mr. Manthripragada continued, "Our long-term capital allocation strategy is unchanged. In the near-term, we will prioritize redemption of the preferred equity and subsequent deleveraging. This provides an opportunity for the underlying organic growth and cash generation potential of our business to shine. We believe these combined efforts will highlight to our employees, clients, colleagues and stockholders the incredible value creation opportunity afforded by Montrose and its environmental mission—clean air, water, and soil for all."

"As we look ahead to 2025, and as evidenced by our guidance, we remain confident and optimistic in our growth trajectory and value creation capabilities consistent with our mission and strategy."

Fourth Quarter 2024 Results

Total revenue in the fourth quarter of 2024 was $189.1 million compared to $165.7 million in the prior year quarter, an increase of 14.1%. The increase in revenue was primarily comprised of $18.0 million from acquisitions and $15.7 million from strong organic growth in our Assessment, Permitting and Response and Measurement and Analysis segments, partially offset by an $8.4 million reduction in environmental emergency response revenue, and lower treatment technology revenue.

Net loss was $28.2 million, or $0.90 of LPS, in the fourth quarter of 2024, compared to net loss of $1.4 million, or $0.18 LPS, in the prior year quarter. The year-over-year change in net loss was primarily attributable to a one-time charge of $18.0 million related to the previously announced cancellation of all executive Stock Appreciation Rights (SARs), and increases in income tax and interest expenses of $7.3 million and $2.2 million, respectively. The decline in LPS was primarily attributable to the higher net loss, partially offset by lower dividends on our Series A-2 Preferred Stock (Series A-2) and higher weighted average outstanding share count.

In the fourth quarter of 2024, Adjusted Net Income¹ and Adj EPS¹ were $14.7 million and $0.29, respectively, equal to the prior year quarter Adjusted Net Income¹ of $14.7 million and slightly higher than prior year Adj EPS¹of $0.27. Adj EPS¹ in the current year benefited from lower dividends on our Series A-2, partially offset by higher weighted average outstanding share count in the quarter.

Fourth quarter 2024 Consolidated Adjusted EBITDA¹ was $27.2 million, or 14.4% of revenue, compared to $17.5 million, or 10.5% of revenue, in the prior year quarter. The increase in Consolidated Adjusted EBITDA¹ was due to higher revenue driven by organic growth and acquisitions. The increase in Consolidated Adjusted EBITDA¹ as a percentage of revenue resulted primarily from operating leverage in our Measurement and Analysis segment and the benefits from recent acquisitions.

Full Year 2024 Results

Total revenue in the full year 2024 increased by $72.2 million, or 11.6%, to $696.4 million, compared to $624.2 million in the prior year period. The increase in revenue was primarily comprised of $81.6 million from acquisitions, and strong organic growth of $43.4 million, or 8.3%, driven by the Assessment, Permitting and Response and Measurement and Analysis segments. These increases were partially offset by $43.3 million lower environmental emergency response revenues, lower treatment technology revenue, and the December 2023 sale of the Discontinued Specialty Lab, which generated $8.8 million of revenue in 2023.

Net loss was $62.3 million, or $2.22 LPS, in the full year 2024 compared to a net loss of $30.9 million, or $1.57 LPS, in the prior year period. The year-over-year increase in net loss was primarily attributable to a one-time charge of $18.0 million related to the previously announced cancellation of all SARs and higher income tax and interest expenses of $9.0 million and $8.1 million, respectively. The decline in LPS was primarily attributable to the higher net loss, partially offset by lower dividends on our Series A-2 and higher weighted average outstanding share count.

In the full year 2024, Adjusted Net Income¹ and Adj EPS were $55.8 million and $1.08, respectively, similar to prior year period Adjusted Net Income¹ and Adj EPS¹ of $56.1 million and $1.07, respectively.

Consolidated Adjusted EBITDA¹ for the full year 2024 was $95.8 million, or 13.8% of revenues, compared to $78.6 million, or 12.6% of revenues, in the prior year period. The increases in Consolidated Adjusted EBITDA¹ and Consolidated Adjusted EBITDA¹ as a percentage of revenues were primarily due to operating leverage across all segments from higher revenues driven by organic growth and acquisitions.

Operating Cash Flow, Liquidity and Capital Resources

Net cash provided by operating activities for the full year ended December 31, 2024, was $22.2 million compared to cash provided by operating activities of $56.0 million in the prior year period. The year-over-year decrease was primarily due to an increase in accounts receivable associated with higher revenues in the fourth quarter, as well as the previously disclosed receivables from a large US government project. The large project was for the City of Tustin, CA (Tustin) and related to a US Navy-owned facility fire and subsequent environmental monitoring and remediation. The Company was contracted directly by Tustin and the US Navy is committed to reimburse Tustin for its total costs associated with the fire. Tustin is continuing to work with the US Navy on reviewing and processing invoices and payments, which have been delayed due to the complexity of the incident. Tustin has not disputed any of the Company's invoices and has continued making payments in good faith while waiting for additional US Navy funding. To-date Tustin has paid forty percent of all Montrose invoices. As this press release date, the remaining amount Tustin owes Montrose is approximately $13.5 million. We are working collaboratively with Tustin, and we remain confident in full collectability of the outstanding balance. Despite these delays, the business generated strong cash flow in the fourth quarter.

On February 26, 2025, the Company entered into a new $500 million Senior Secured Credit Agreement, comprised of a $200.0 million term loan and a $300.0 million revolving credit facility, maturing on February 26, 2030 (2025 Credit Facility). The 2025 Credit Facility includes an accordion feature of $200.0 million, providing additional flexibility to Montrose.

As of December 31, 2024, Montrose's leverage ratio under the 2025 Credit Facility was 2.1x.

Pro forma for the 2025 Credit Facility, as of December 31, 2024, Montrose had $296.7 million of liquidity, including $12.9 million of cash and $283.8 million of availability on its revolving credit facility.

Webcast and Conference Call

The Company will host a webcast and conference call on Thursday, February 27, 2025, at 8:30 a.m. Eastern time to discuss fourth-quarter and full-year financial results. The prepared remarks will be followed by a question-and-answer session. A live webcast of the conference call will be available in the Investors section of the Montrose website at www.montrose-env.com. Alternatively, to participate on the day of the call, participants may access the live call by dialing 1-844-826-3035 in the United States or 1-412-317-5195 internationally approximately ten minutes before the call and requesting to join the Montrose Fourth Quarter 2024 Earnings Conference Call. For those who are unable to listen to the live broadcast, an audio replay of the conference call will be available on the Montrose website for 30 days.

About Montrose

Montrose is a leading environmental solutions company focused on supporting commercial and government organizations as they deal with the challenges of today and prepare for what's coming tomorrow. With ~3,410 employees across 120 locations worldwide, Montrose combines deep local knowledge with an integrated approach to design, engineering, and operations, enabling Montrose to respond effectively and efficiently to the unique requirements of each project. From comprehensive air measurement and laboratory services to regulatory compliance, environmental emergency response, permitting, engineering, and remediation, Montrose delivers innovative and practical solutions that keep its clients on top of their immediate needs – and well ahead of the strategic curve. For more information, visit www.montrose-env.com.

Forward‐Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may be identified by the use of words such as "intend," "expect", and "may", and other similar expressions that predict or indicate future events or that are not statements of historical matters. Forward-looking statements are based on current information available at the time the statements are made and on management's reasonable belief or expectations with respect to future events, and are subject to risks and uncertainties, many of which are beyond the Company's control, that could cause actual performance or results to differ materially from the belief or expectations expressed in or suggested by the forward-looking statements. Additional factors or events that could cause actual results to differ may also emerge from time to time, and it is not possible for the Company to predict all of them. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update any forward-looking statement to reflect future events, developments or otherwise, except as may be required by applicable law. Investors are referred to the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2024, for additional information regarding the risks and uncertainties that may cause actual results to differ materially from those expressed in any forward-looking statement.

Contact Information:

Investor Relations:
Adrianne D. Griffin
Senior Vice President, Investor Relations and Treasury
(949) 988-3383
[email protected]

Media Relations:
Tammy Hovey
Director, Corporate Communications
(917) 520-2751
[email protected]

Non-GAAP Financial Information

In addition to our results under GAAP, in this release we also present certain other supplemental financial measures of financial performance that are not required by, or presented in accordance with, GAAP, including, Consolidated Adjusted EBITDA, Adjusted Net Income and Basic and Diluted Adjusted Net Income per Share. We calculate Consolidated Adjusted EBITDA as net income (loss) before interest expense, income tax expense (benefit) and depreciation and amortization, adjusted for the impact of certain other items, including stock-based compensation expense and acquisition-related costs, as set forth in greater detail in the table below. We calculate Adjusted Net Income as net income (loss) before amortization of intangible assets, stock-based compensation expense, fair value changes to financial instruments and contingent earnouts, discontinued specialty lab, and other gain or losses, as set forth in greater detail in the table below. Basic and Diluted Adjusted Net Income per Share represents Adjusted Net Income attributable to stockholders divided by the fully diluted number of shares of common stock outstanding during the applicable period.

Consolidated Adjusted EBITDA is one of the primary metrics used by management to evaluate our financial performance and compare it to that of our peers, evaluate the effectiveness of our business strategies, make budgeting and capital allocation decisions and in connection with our executive incentive compensation. Adjusted Net Income and Basic and Diluted Adjusted Net Income per Share are useful metrics to evaluate ongoing business performance after interest and tax. These measures are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Further, we believe they are helpful in highlighting trends in our operating results because they allow for more consistent comparisons of financial performance between periods by excluding gains and losses that are non-operational in nature or outside the control of management, and, in the case of Consolidated Adjusted EBITDA, by excluding items that may differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments.

These non-GAAP measures do, however, have certain limitations and should not be considered as an alternative to net income (loss), earnings (loss) per share or any other performance measure derived in accordance with GAAP. Our presentation of Consolidated Adjusted EBITDA, Adjusted Net Income and Basic and Diluted Adjusted Net Income per Share should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items for which we may make adjustments. In addition, Consolidated Adjusted EBITDA, Adjusted Net Income and Basic and Diluted Adjusted Net Income per Share may not be comparable to similarly titled measures used by other companies in our industry or across different industries, and other companies may not present these or similar measures. Management compensates for these limitations by using these measures as supplemental financial metrics and in conjunction with our results prepared in accordance with GAAP. We encourage investors and others to review our financial information in its entirety, not to rely on any single measure and to view Consolidated Adjusted EBITDA, Adjusted Net Income and Basic and Diluted Adjusted Net Income per Share in conjunction with the related GAAP measures.

Additionally, we have provided estimates regarding Consolidated Adjusted EBITDA for 2025. These projections account for estimates of revenue, operating margins and corporate and other costs. However, we cannot reconcile our projection of Consolidated Adjusted EBITDA to net income (loss), the most directly comparable GAAP measure, without unreasonable efforts because of the unpredictable or unknown nature of certain significant items excluded from Consolidated Adjusted EBITDA and the resulting difficulty in quantifying the amounts thereof that are necessary to estimate net income (loss). Specifically, we are unable to estimate for the future impact of certain items, including income tax (expense) benefit, stock-based compensation expense, fair value changes and the accounting for the Series A-2 Preferred Stock. We expect the variability of these items could have a significant impact on our reported GAAP financial results.

In this release we also reference our organic growth. We define organic growth as the change in revenues excluding revenues from i) our environmental emergency response business, ii) acquisitions for the first twelve months following the date of acquisition, and iii) businesses held for sale, disposed of or discontinued. Management uses organic growth as one of the means by which it assesses our results of operations. Organic growth is not, however, a measure of revenue growth calculated in accordance with U.S. generally accepted accounting principles, or GAAP, and should be considered in conjunction with revenue growth calculated in accordance with GAAP. We have grown organically over the long term and expect to continue to do so.

In a given reporting period, when we refer to revenue changes driven by acquisitions, we are referring to the revenue contribution from any acquisition from its closing date through the first 12 months of that acquisition, at which point any subsequent contribution therefrom would be organic. 

SOURCE Montrose Environmental Group, Inc.