Montrose Environmental Group Inc. of North Little Rock (NYSE: MEG) on Tuesday reported a net loss of $13.4 million in the first quarter, narrowing its loss of $14.7 million from the same quarter a year ago.
Per share, the loss came to 53 cents. Adjusted for one-time gains and costs, earnings were 16 cents per share.
The results topped Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for adjusted earnings of 5 cents per share.
Montrose posted revenue of $155.3 million in the period, also surpassing Street forecasts. Three analysts surveyed by Zacks expected $152.6 million.
Shares of the company fell more than 8% on Wednesday morning to $43.61. Year to date, shares were up 36%.
Montrose attributed smaller losses in the quarter primarily to a net gain from fair value adjustments related to interest rate swaps, as well as lower income tax expenses in the current year.
The increase in revenue was primarily due to organic growth in two segments: assessment, permitting and response, and measurement and analysis. Acquisitions also boosted revenue in the quarter. Montrose acquired five firms in 2023 to grow its reach and capabilities.
Montrose’s environmental emergency response service saw revenue fall in the first quarter. Gains were also partially offset by discontinued specialty lab services and the shift away from lower margin revenue in its biogas business.
CEO Vijay Manthripragada said new federal regulations on the amount of per- and polyfluoroalkyl substances, also known as PFAS or “forever chemicals,” allowed in water are expected to accelerate customer activity across Montrose’s segments. The U.S. Environmental Protection Agency finalized the rules in April.
“As a result, we remain incredibly optimistic about Montrose’s long-term growth potential, and we are confident in our ability to create significant value for our shareholders and achieve our recently increased 2024 guidance,” Manthripragada said in a statement.
Montrose in April completed a public offering of 3.45 million shares of its common stock, raising about $122.4 million. Montrose said the money is being used for general corporate purposes and acceleration of strategic growth initiatives, including research and development, repayment of debt, and acquisitions or business expansion.
Montrose completed two acquisitions in the first quarter. It purchased Epic Environmental, an environmental science and engineering consultancy based in Australia, and Two Dot Environmental Consulting, an environmental consultancy Arvada, Colorado, that focuses on energy and renewable energy clients.
The Associated Press contributed information to this report.
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