Montrose Environmental Group Inc. (NYSE: MEG) of North Little Rock on Tuesday reported widening losses for the fourth quarter and full year as demand for pandemic-related services continued falling.
The news wasn't received well by investors. Shares of the company plummeted 30% Wednesday morning.
More: Read the company's full earnings report.
The company posted a quarterly loss of $10.8 million, or 50 cents per share, compared to a loss of $1.5 million in the same quarter a year ago. It attributed the year-over-year change primarily to higher stock-based compensation expenses.
Revenue in the period was $139.5 million, down 3% from $143.8 million a year ago.
The results did not meet Wall Street expectations. The average estimate of five analysts surveyed by Zacks Investment Research was for a loss of 24 cents per share and revenue of $141 million.
For the full year, losses totaled $31.8 million, compared to a loss of $25.3 million in 2021. On a per-share basis, the loss came to $1.62.
Revenue in 2022 totaled $544.4 million, down less than 1% from $546.4 million the previous year.
CEO Vijay Manthripragada said that revenue "held steady" despite lower demand for COVID-related services provided by CTEH, the emergency preparedness firm it acquired in 2020. He pointed to growth in its PFAS water treatment technology business, greenhouse gas measurement and mitigation, and renewable energy services.
"As we have highlighted since our IPO, the emergency response nature of our CTEH business remains difficult to predict, as was the case in Q4," Manthripragada said. "We expect to mitigate the inherent variability in this business through our investment in the organic growth of their non-response services and acquisitions. We continue to believe in the incredible value and strong synergies between core Montrose and CTEH response services."
Montrose paid $28.6 million in cash last year to acquire three companies:
- Huco Consulting Inc. of Houston, a consultant for integrating EHS and ESG data software, and
- AirKinetics Inc. of Anaheim, California, an emissions testing services provider
- TriAD Environmental Consultants, a small environmental consulting firm with a focus on the Southeast U.S.
Then company in January announced the acquisition of two more companies:
- Frontier Analytical Laboratories of El Dorado Hills, California, which specializes in analysis of persistent organic pollutants, also known as "forever chemicals"
- Environmental Alliances Inc. of Wilmington, Delaware, an environmental engineering and consulting firm
Manthripragada said the acquisitions are part of the company's plan to execute on organic growth opportunities and that more are expected this year.
Montrose finished 2022 with $166.3 million in debt and $214.8 million of liquidity, including $89.8 million of cash and $125 million of availability on its revolving credit facility.
The company projects 2023 revenue in the range of $550 million to $600 million.
Montrose reported earnings days after a twin-engine plane crash in Little Rock left five CTEH employees dead. The employees were responding to a deadly explosion at an Ohio metals plant.
The plane crash is under investigation.
The Associated Press contributed information to this report.