Icon (Close Menu)

Logout

Montrose Narrows Losses in Q4, Announces Purchase of Colorado Environmental Consultancy

2 min read

Montrose Environmental Group Inc. of North Little Rock on Thursday (NYSE: MEG) reported smaller losses in the fourth quarter and announced the acquisition of a Colorado environmental consulting firm.

The company’s net loss was $1.4 million, compared to a loss of $10.8 million in the same quarter the previous year. On a per-share basis, the loss came to 18 cents. The company attributed the reduction primarily to a net gain from fair value adjustments related to a preferred stock conversion option and interest rate swaps, as well as an income tax benefit.

Adjusted income was $10.6 million, or 27 cents per share, which beat Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 10 cents per share.

The company posted revenue of $165.7 million in the period, up 18.8% from $139.5 million a year ago. That also topped Wall Street forecasts. Four analysts surveyed by Zacks expected $157.3 million.

Shares of the company jumped 16% Thursday morning to $38.35. Year to date, shares were up 20%.

Montrose said that organic growth in two segments — the assessment, permitting and response segment, and the measurement and analysis segment — drove an increase in full-year revenue. The company posted $624.2 million in revenue in 2023, up 14.7% from 2022.

The company also saw revenue increase from environmental emergency response services and the contributions of acquisitions. Montrose acquired five firms last year to grow its reach and capabilities.

But gains were offset by discontinued services and lower revenue from the wind down of large projects involving PFAS, or “forever chemicals.” The company also cited a shift in its biogas business toward higher margin services.

For the full year, Montrose posted a net loss of $30.9 million, compared to a loss of $31.8 million in 2022. The loss per share came to $1.57.

Montrose filed for nine patents in 2023 addressing several “emerging and potentially significant market opportunities,” CEO Vijay Manthripragada said in a statement.

“We expanded our portfolio of PFAS treatment technologies to meet the needs of our clients with wastewater and landfill challenges given pending U.S. environmental regulations. We are also helping many of our clients and communities with air quality monitoring and greenhouse gas measurement.”

The company expects low double-digit organic revenue growth in 2024, along with continued margin expansion and strong cash flow due to “substantive end-market tailwinds and increased predictability in our business,” Manthripragada said.

Revenue is projected to be in the range of $675 million to $725 million.

The company’s latest acquisition is Two Dot Consulting LLC of Arvada, Colorado, an environmental consultancy that specializes in regulatory services to the oil and gas, and renewables sectors in the Rocky Mountain and adjacent regions.

Two Dot’s senior leadership team, including founder and CEO Todd Spivey, will join Montrose’s consulting and engineering division.

Financial terms of the transaction were not disclosed.

Two Dot’s employee roster includes includes wildlife biologists, wetland scientists, botanists, ornithologists and environmental health and safety specialists.

The Associated Press contributed to this report.

Send this to a friend