Montrose Environmental Group Inc. of North Little Rock (NYSE: MEG) reported record quarterly revenue for the period ending June 30, but the environmental services firm’s losses widened due to higher interest and income-tax expenses.
The loss came to $10.2 million, larger than the loss of $7.2 million it reported in the second quarter of 2023. Per share, the loss came to 39 cents.
Earnings adjusted for one-time gains and costs came to $10.8 million, or 20 cents per share.
The company posted revenue of $173.3 million in the period, up 8.9% from $159.1 million a year ago. The increase was primarily driven by organic growth in Montrose’s assessment, permitting and response segment, and its measurement and analysis segment. The company said that recent acquisitions also contributed to higher revenue.
Still, the results fell short of Wall Street forecasts. Four analysts surveyed by Zacks expected revenue of $174.6 million.
In a statement, Montrose CEO Vijay Manthripragada said the company does not expect the U.S. Supreme Court’s recent ruling overturning the Chevron doctrine to alter the company’s growth or outlook. The 40-year-old doctrine had been the basis for upholding thousands of federal regulations, including environmental rules, that have created business opportunities for companies like Montrose.
Manthripragada said the company does not expect the outcome of the U.S. presidential election to affect its plans, either.
“The impact of U.S. federal policy swings has historically been muted for Montrose given the significant influence of state and local environmental regulations, stakeholder pressure, and our limited exposure to any one end market,” he said. “Our business mix may shift, but our aggregate outlook and growth algorithms remain unchanged. We expect further regulatory complexity for our U.S. clients and anticipate a shift of influence to state regulatory agencies, which are expected to drive incremental demand across our portfolio of services.”
Manthripragada noted that about 20% of Montrose’s revenue is generated in Canada, Australia and Europe, which continue to see “independent, attractive, and secular tailwinds.”
Montrose in April completed a public offering of 3.45 million shares of its common stock, raising about $122.4 million. The company 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.
The company has completed five acquisitions this year. Most recently, it purchased air permitting and compliance consultancy Spirit Environmental LLC of Houston. In addition to permitting and compliance, Spirit provides dispersion modeling and environmental consulting services, including water quality, sustainability, waste and natural resources management for the energy and petrochemical industries across the central U.S.
Shares of the company jumped more than 6% Wednesday morning to $31.10. Year to date, shares were down about 2.6%.
The Associated Press contributed information to this report.
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