Montrose Environmental Group (MEG) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 and first-half 2024 revenue and adjusted EBITDA, with 8.9% year-over-year revenue growth to $173.3M in Q2 and 13.1% growth to $328.7M for H1, driven by organic growth, pricing, and accretive acquisitions.

• Completed five acquisitions in 2024, expanding geographic reach and service capabilities, with $11.6M in revenue contribution and strategic additions in Canada, the U.S., and Australia.

• Business model is highly recurring and integrated, with strong cross-selling, client retention, and resilience to political and regulatory changes.

• Customer activity remains strong, supported by regulatory requirements, sustainability goals, and secular tailwinds in environmental regulation.

• Reaffirmed full-year 2024 organic growth expectation of 10%-12%.

Financial highlights

• Q2 2024 revenue was $173.3M, up 8.9% year-over-year; H1 2024 revenue was $328.7M, up 13.1%.

• Q2 2024 adjusted EBITDA was $23.3M (13.5% margin), up from $21.2M (13.3%) year-over-year; H1 2024 adjusted EBITDA was $40.2M (12.2% margin).

• Q2 2024 adjusted net income per diluted share was $0.20, down from $0.29 in Q2 2023, mainly due to higher interest and tax expenses.

• Q2 2024 net loss attributable to common stockholders was $10.2M–$12.9M ($0.39 LPS), compared to $7.2M–$11.3M ($0.38 LPS) in Q2 2023.

• Cash used in operations was $21.1M for H1 2024, compared to $24.5M provided in H1 2023, due to higher receivables and integration of acquisitions.

Outlook and guidance

• Reiterated full-year 2024 revenue guidance of $690M–$740M and adjusted EBITDA of $95M–$100M, with low double-digit organic growth and margin expansion expected.

• Nearly 60% of full-year adjusted EBITDA is expected in the second half, driven by seasonality and timing of acquisitions.

• Third quarter 2024 revenue growth expected at ~10% year-over-year, with 100 basis points margin improvement.

• Management expects regulatory complexity and state-level influence to drive demand, with 20% of revenue from international markets.

• Interest expense is expected to remain significant as the company continues to leverage its credit facility.