Montrose Environmental Reports Wider Q1 Losses, Record Revenue

(Montrose Environmental Group)

Montrose Environmental Group Inc. of North Little Rock (NYSE: MEG) on Wednesday reported its highest-ever first-quarter revenue.

Revenue for the quarter was $177.8 million, up 14.5% from $155.3 million in the same period last year. The increase in revenue was primarily comprised of organic growth of $17.8 million, and contributions from acquisitions of $13.5 million.

The company, which focuses on helping organizations address environmental challenges, reported a net loss of $19.4 million, or 64 cents per diluted share, larger than the loss of $13.4 million, or 53 cents per diluted share, in the first quarter of 2024.

The larger loss was partly due to a $4.2 million increase in interest and income tax expenses.

Adjusted first quarter income was $5.8 million, or 7 cents per share, which is a 30% decrease from $8.4 million in the same quarter last year.

In the earnings release, Montrose also announced an inaugural stock repurchase program of up to $40 million and an execution on capital allocation that redeemed $60 million of preferred equity in April.

“Our uniquely integrated portfolio of environmental science-based solutions and technology continues to position Montrose to exceed expectations,” Montrose CEO and Director Vijay Manthripragada said in the release.

“In November 2024, we announced an acquisition pause to focus on stated objectives — to deliver high-single-digit organic revenue growth, enhance margins, improve cash flow generation, prioritize redemption of the preferred shares, optimize our balance sheet and maintain ample liquidity,” he said. “Our first quarter performance demonstrates the initial benefits of this shift in our focus.”

Montrose’s revenue growth was led by its remediation and reuse segment, and its measurement and analysis segment, which offset a reduction in the company’s assessment, permitting and response segment due to several larger projects in the prior year that did not repeat.

The company also reported a 125% improvement in cash flow, with operating cash flow reaching $5.5 million in the quarter compared to negative $22 million in the same period a year ago.

Montrose said in the release it expects to “proactively address” any impact of tariffs on its project pricing and cost structure, and that the effect of “current geopolitical dynamics” on client relationships has been minimal and is expected to remain so.

After the earnings release, shares of Montrose jumped nearly 17% to $15.05 in after-hours trading. The stock was down about 68% over the past 12 months.