Montrose Environmental (MEG) 13 Nov 222022 Q3 Earnings call transcript

Greetings, ladies and gentlemen, and welcome to the Montrose's Environmental Group Third Quarter of 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.[ Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rodny Nacier of Investor Relations.

Thank you. quarter call. third our to XXXX earnings Welcome

Joining Executive Financial Officer; Vijay Manthripragada Officer. and Chief our President and me are Allan Dick, Chief

earnings website. During referring on we today, Investors presentation, our the our our available which of will section is discussion to be

is on the release website. available also earnings Our

for results Moving X. Private of safe the harbor performance filings, be affect ended like future of no December the I the our financial differ and to the today's Act performance. refer We XX, everyone recent XXXX, that operating which assume may to to will update are include material including in you considered risks risks could Actual to report subject any Litigation SEC a annual Slide Securities well XXXX. Reform that identify and and uncertainties call to evaluating as known should as forward-looking and would We XX-K way remind forward-looking statements to in that statements. provisions fiscal our that our principal uncertainties any due unknown year outlook. Form statements forward-looking obligation on

to Vijay, comparable With measures would and like certain the non-GAAP of Please these isolation income per earnings the including results a to reconciliation of I Slide In to be financial to adjusted measures beginning thereof today, presentation providing the adjusted from comparable over discussion purposes, discussing and to consolidated these see we are informational measures. for why our X. share. appendix useful be their income that, limitations and net GAAP or in adjusted believe most investors, call not now certain for addition, measures directly on net considered We earnings provide EBITDA, using turn non-GAAP the non-GAAP or will we these measure. GAAP should most they the directly release

few up a will to that will website. begin, And open I hand over joining through X then highlighted to of X our themes business to us it it X before. shared today. for Thank generally Allan I speak we provide Pages Welcome I will you all to and Rodny. Q&A. of Dicks highlights would you, reiterate on I and review, we've presentation the like our before to financial

first is The is for and services an fiscal best annual patterns environmental that basis. evaluated on demand not does our quarter follow

of The shocks second pandemic, who belong these that theme is a of all world proud turbulence. With relevant quarter quarter team helped our whose results managed produce and colleagues macroeconomic the another through to our our take geopolitical key am around I themes that, several dedication members great to now that of a XXXX results. us third are to results. let moment me recap have

are growing lines services it driven and to Treatment, gas most service are our demand our in from primarily acquisitions, as year, areas saw of measurement continues particular, business and regulations. benefit recurring air and and mitigation has our performance across also energy. PFAS strong The in Water greenhouse by renewable recent quarter and the and First, lab which all across of

tailwinds validate ago. Our quarter X over and the performance continues IPO we've years demand to our since themes third outlined regulatory

reflects service continued our differentiated demand growth, and model the CTEH, organic stellar for solutions. Our excluding integrated

margin organic pleased strong sequential to addition overall in our excluding improvement. Second, revenue are we growth, with CTEH,

the and with business factors noted The and efforts impact mix pressures pricing as EBITDA some As initiatives inflationary costs such were we with saw quarter, we track respond of unexpected along us to with other on back of allowed other last given get travel. those select on able to margins.

generation. sheet strong strength of cash the with and balance happy also are we finally, and Third our

environmental innovation. our through date ample consolidating flexibility industry sheet balance in our us provides from cash to flow to been cutting-edge acquisitions and continue Our have with funded and operations investing

our As unchanged. and relates remain to it strategy acquisitions, outlook

We year. continue our industry, consolidate this highly fragmented deals X completing to

our capabilities CTEH, on usually service we immediately pace This and of talent acquisitions growth. tempered we Montrose our great the increase the excluding are acquisitions as add organic and they accretive, Our year, supporting surge team. focused our growth, of in given in to organic rate revenue

slower in For example, across opportunity remains pipeline training management XXXX, moved, hiring, helping acquisitions number we choice move The consulting Despite and were AirKinetics team and multiple thrilled States to the as cadence programs the Southeastern teams to TriAD third create all Montrose. capabilities are addition of our and of haven't and United so ever. and very Montrose focus strategically average the in our States to welcome a and additive value Testing as quality in potential the acquisitions Southwestern team TriAD's AirKinetics at the addition strong with to The and of geographies. multiples United during quarter. relatively of to Air

of will XXXX historically We cadence we accelerate back trended. acquisitions expect our to where have

business recent our Next, for forward. to minutes catalysts we developments let see and me that a some take walk moving through few

As that the opportunities, private business. better enforcement it regulation believe Montrose We positioned policies. industry long-term we across government remain sector to for our business outlook and these the tailwinds and at initiatives, as regulatory our on lines fundamental to stewardship well environmental ESG see relates and environmental belief and corporate is tailwinds favorable capitalize underpins forefront and exceptionally of

liability saw have Superfund well of for and release impact advisory could or consulting recently of to EPA addition designation to spills action PFAS impacts to remedial the a report putting select investigations as the hazardous potential or will services CIRCA like likely fire PFOS regulations environment companies Congress. monitoring current that a at any PFAS from and recently demand triggers request future members September with will out have that of we additional PFOA inventory, and cause for chemicals in level continue Furthermore, EPA requirement additional environmental XX to developments the Montrose, the substances to cleanup as to the under This comprehensive terms be when the designate for the specific to This and Outside in proposed PFOS momentum In compensation also actions. formal and in refunded trigger PFAS response as PFOA XXXX, eligible and regulatory the announced state the ACT. program. contamination certain the October, in and toxic United which particular. of of States, direct actions EPA, the for also by a continued under

emissions EPA reduction and will methane would new for sources standards expect these continue to The create existing X sources performance require year, our of for emission and methane segments. hundreds of of thousands to states proposed regards proposal nationwide time. methane developments We requirements late all tailwinds across first to emissions, the strengthens last emissions. With from the expands reduce

monitoring EPA programs. services, are seeking adopted, community We these also our and support impacting and monitoring expect about measuring, aware measurement is would that monitoring we to to be emissions increased assessment regulations analysis technologies Should information segment. demand primarily see our the opportunities for community

services, to our grant may environmental may emissions, EPA for greenhouse April, and Regarding account now how may process. the and will EPA government impose the made consulting actions in by life communities, have wild further $X Regulators to changes habitats NPA increase Inflation fragment Justice created the gas oversee the of created neighbourhoods. on to new billion particularly and the Notably, also the block burdens implementation Act. delivery XXXX Reduction program EPA division has and new disadvantaged Climate a Environmental

this revenues, fully and we our run implemented, anticipated perform to hurricanes levels a picked a yet for third clients is to services. continues with believe has by discuss policies. aggregate, and to Montrose by particular, performance and as to environmental doing expertise Within segment, incidents like positive is be rate our help an next for more I despite with rate exceptionally testing Montrose to We it caused momentum continuity development and central Support Response grow. to clients fires our would compared navigate in last new our this Assessment, quarter mandates in exceptional is is business environmental all in deceleration our and become our CTEH the environmental year. up and governmental continues While to job stewardship business team priorities to following believe Permitting for and that say segment. well CTEH-COVID-XX that corporate services. the have more advisory, remediation is regarding that protection update positioned given to This rapidly evolving continues environmental above

Excluding see were positive to pleased CTEH, contributions we from our acquisitions.

example, gas acquisitions Within lower the the growth for remains West shift drove Utilities risk, in are of along Our in demand acquisitions. third Measurement segment, margins margins this impacted testing well, with services. services primarily and were for and recent during advisory solid select organic managing our greenhouse attractive and growth very performing in Analysis our strong our segment CTH fire supporting Coast such by as Margins areas quarter. our the

discussed, our just further as segment I position momentum market Given a the regulatory in this expect leader. opportunities given we

to discussed. continue teens normalize segment renewable in segment, PFAS the and to previously Water XX% services. within our was Remediation and And this demand finally, Reuse Treatment once quarter in the our in again range, outperformance organic high growth by third driven for margins our as Our we've biogas

margins below we into given this what normalized As we've business. remain reiterated on prior consider levels our calls, investments would ongoing

for us to are I investments around to the To hard to these before it you infrastructure, continue world expectations. year. the am opportunity X In margin over will our value To growth Allan, that years. X with and a believe you. the you efforts we for us the the next place. in opportunity better our turn grateful listening, leaving team you've enable sequential those improvement put creating support over this With the incredibly would while our far thank of of example, thank for establishment like our you segment, to continued capitalize in is the times. tremendous members world through we that all so thank all of giving that this uncertain on see which I investors, did said, For work for in for their European and your to line summary, outsized I

based going to our to credit a outlook moment. closing in remains Our our a in third great and reflect out XXXX trajectory a strong to upon is expand positive Allan? firm. quarter look for XXXX results that Thank on our business you. forward We and momentum XXXX. Allan

our the quarter, third relationships reflecting The Thank continued in organic in business success. expanding our growth cross-selling and ongoing you, core strong customer Vijay.

closing organic recent most We M&A XXXX. across lines. are the revenue of XX. of We our moving with our We strategy continuing to -- our in acquisition Slide performance fourth business on to also growth our execute saw

million as well prior the decrease acquisitions, compared exiting the third positive to million to year-over-year from These the and benefits as Our to COVID-XX of Analysis, revenue The dropped planned Measurement by down by $XXX.X and contributions lower COVID-XX-related period growth decrease driven and revenue lower was growth contracts. partially was the significantly This versus contracts. This $XX.X legacy in $XXX.X and prior million from X.X% by to The COVID-XX Year-to-date, Measurement were and organic $XX.X revenue segments as revenue was year added O&M positive Analysis, us million by overcome $XXX.X our more offset than growth organic and the revenues well our this in segments CTEH. million. million exit primary treatment and the the from year-to-date $X.X million wastewater were revenue. provided CTEH, in as biogas period services quarter. which as from Remediation to quarter COVID-XX added contributions year-to-date $XXX.X revenues year-to-date O&M revenues quarter. significantly certain revenues well driver up and the to of which Reuse in in were revenue Remediation our as acquisitions, Reuse helped year

adjusted Slide performance consolidated on our EBITDA XX. at Looking

have certain or prior XX.X% of of Third compared quarter of to was $XX.X consolidated in and by both EBITDA due sequential of consolidated consistent prior million our resources in consolidated travel, the EBITDA our is driven Year-to-date, in adjusted resulting both pricing water be $XX.X infrastructure XXXX, This costs in year business will investments or or in on attack variable July, in million quarter. the with with consolidated to field other to to operating company. adjusted revenue adjusted and XX% see improvement traction basis. expect year-over-year costs. EBITDA and or been and how manage how compared million is the year and labs’ the higher the biogas our a continue seen strong temporarily performance percentage which $XX.X hire periods operate ability with for quarter. performance an supplies the have in in impacting we The our businesses period. we XX.X% $XX in I'll June to million mix, that Year-to-date, consistent revenue margins, June, revenue annually. of and direct adjusted pleased our we initiatives into we EBITDA evaluate staff, which of lab adjusted as quarterly This was and XX.X% the EBITDA change consolidated allocate annual reemphasize business Montrose's revenue needs of disrupted cyber stronger revenue continued was fourth to assessed of of predictability dollars and the

respectively. quarter revenue Turning services to million companies segments In XXXX. our revenue revenue in from significantly Response acquired and by segment EBITDA end the segment offset our both the third decreased adjusted by by decreases EBITDA year-over-year from and to COVID-XX-related XX. business lower to this in The partially was subsequent driven of Slide and provided and CTEH, of Assessment, $X.X on operating $XX.X million, Permitting segment, revenue adjusted

In in the to adjusted and as Environmental segment, percentage on segment as the and acquisitions primarily of Standards reduction run Intelligence U.S. after was of was CTEH businesses, year our $XX.X degree, Analysis a as lesser our of and of some our Treatment ability segment, this third a this which projects for our $XX.X Remediation mix, XX.X%, to of quarter result cyber And operate. of pandemic-related the as EBITDA for finally, specialty timing business in significant XX% XX.X% than prevention Operating than calls, impact other attack, of the million, our which in O&M remediation to as and XXXX. at Horizon following to year exiting contracts. in attributable adjusted in in million, well of revenue Water in PFAS revenues As by requirements the labs’ discontinued result infrastructure offset our has some EBITDA acquisitions Measurement to labs we've and margins of revenue to our biogas was slight treatment growth primarily to Environmental of percentage continued in increase of normalization of segment. prior end partially as our investments expected year-over-year our waned biogas all organic reiterated of the the revenues XXXX, XX.X% a the a of reuse the COVID-XX businesses XX.X% the in revenue business which of of as lower margins. a revenue earlier and completed decreased of a increased A Analysis and demand services disrupted recent a increased & Measurement EBITDA result & of business, water our temporarily the organic reflecting a and percentage and mix our which the in as decrease & adjusted operating demand We technology temporarily Reuse the quarter lower impact was services growth testing

operating in consideration the operations in activities the prior of Slide year million on $XX.X prior from flow the period. respectively. compared capital from of million cash XX. was $XX.X includes our current Year-to-date, of Cash payment structure million from year to flow acquisition-related and $X.X $XX.X Moving operating to year, activities the cash in million

lower period. from EBITDA of earnings the the as acquisition-related XX% was offset by compared in prior was million months operating items Excluding activities in improved working months before activities percentage an cash cash of in first million, the from million first payments, XX% before to in to This in $XX.X the increase capital prior of XXXX compared change of due from year $XX.X operating $XX.X year. acquisition-related working $X from X in million X the payments primarily in operating increase XXXX. partially current current of activities the noncash an a adjusted of $XX.X capital in of period year Cash year million to to

our ongoing Our the R&D corporate on to with strong in scalability. ensure flows generation reflect investments technology, of continued cash focus and balancing infrastructure cash

year of to expect acquisition-related another report XXXX, cash performance in year-to-date, flow payments. we our strong Given excluding operating

position facility. on credit million revolving and strong cash availability $XXX XXXX, XX, with of hand our an of Our remains of $XX.X as additional on liquidity million September

no we put of rate rising rates in We almost the in place this result and to the have on the have January as of interest we cash sheet. balance swap a exposure year interest

September the effective facility. an of XXXX X, and received achievement company under objectives rate XXXX, and XXXX points for X the the addition, credit on reduction sustainability facility In the in provided company's interest certain basis environmental, social based as credit of governance-related

XXXX, X.Xx. XX, impact the of ratios which earn-out at payable as was leverage of includes cash obligations acquisition-related in Our September contingent

We now maturity redeem have cash, of payment has to Our to obligation prepaid a option time no make-hole Series at in preferred rate if instrument stock given in A-X dynamics environment. subject the of the shares its interest date, the to this potential for and flexible and preferred a the the we preferred any as April view favorable prior fixed equity business, creation XXXX. nature the value to dividend rising the

market include on the A-X balance equity Series the equity in approximately cap, our total at million you billion. stands capitalization $X.X our $XXX If

review Looking XX. Slide our at of business on trajectory a

few discussed over our rate revenue business. we $XX an to past we've CTEH quarters, As of anticipate average $XX million the annual million run for

our CTEH, which to remain to of we continues all elevated addition above business our which a revenues revenue CTEH run the CTEH we the CTEH as average be this remainder excluding expect business, in our COVID-XX transitory our as revenue normalized in rate Although of continued When revenue lines. is the base what from of trend would business to includes other refer from see compared result for are for expected demand revenue nature. expected to related normalize, services, to to revenues

reflecting we've continues on Our discussed base organic call. this solid tailwinds to a business grow trajectory, the at

year-end year we XXXX, of On visibility of full in XXXX. resilient revenue narrowed full our performance XXXX Slide in $XXX This $XX full this expectation from on of for $XX to prior million the outlook million on for million. far in range guidance consolidated our and the year our Based to year revenue million is Moving range revenue. now EBITDA our range be adjusted our in XX. growth, to $XXX million the we thus to year expect $XXX reiterate million to $XXX be through full to updated

outlook remains organic completed excluding Our growth, the for double-digit on full our year of expectations plus CTEH, contribution active acquisitions.

influence the projects may the large of and in year, the we but timing response adjusted year-to-date business. due mindful model up or XXXX. levels and are for make In pull in resiliency is to XXXX nature Earlier the any variability, of business and the of of across the end As any This sales our timing of to of results always, mix year, time push towards up quarter. our operations. focused emergency there execution business and EBITDA was projects our the CTEH's back between third reflect of some quarter the and of summary, all quarter-to-quarter

to We of more questions. are and to helping to the in quarter us updating business, and our their very on robust replace continued to for of momentum 'XX interest we I lines revenues in about next COVID are in also our all progress forward joining us today open Thank over efforts you of for to year-to-date. focused results. for look Operator, dedicated ready the quarter. CTEH We the Montrose. $XXX in you produce thank your our another proud again year-over-year optimistic remain We than our million reduction ability team would like

Session. Tim Thank a is you, William gentlemen, Ladies Instructions] Blair. Our from question-and-answer will now sir. of first question be and Mulrooney we conducting [Operator

quick questions. X just for me, related questions, numbers ones quick Some

for consensus keeping quarter, of for the $XXX year, the below maintain guide guys midpoint. in you you the narrative full the came And guide expectations, the but years. quarters, guidance the you revenue third So million don't that

did quarter or So my with third was question quarter? revenue your some get out is, stuff inline pushed internal the expectations fourth in

conceptually. that take I'll

testing outlook is side. And the don't on the projects the by there of water the of virtue reason the our side, some same. quarters side, Our is do exactly guide renewable we energy the that on on we is

flow. and For will example, ebb they

into of as half virtue so not you a see back of And trajectory sorry, to, the lot the our on us of in we and annual that the the through changing midpoint QX what -- of back half alluded can this year. you by and QX conviction outlook, looks have like

we as So line our yes, in of expectations in very much a that have it with lot was expectations, confidence well. and annual

it. Got

business So aggressive, got no too but far in as concerned. change as consensus you're

change may its Tim, encrypted to QX, in were QX the consensus take if isolation. just enough, those too you right? quarters X that doesn't in aggressive, then be consensus for is aggressive the not for If annual

precisely So quarters we don't the comparatively. guide

Yes. Yes, XX.X%.

Okay.

margin the margins mean, following quarter now, EBITDA On EBITDA guidance, it for of the your declined fourth margins where I pretty strong the EBITDA Vijay. midpoint quarter fourth have implies in several the expansion quarters year-over-year.

kind the a just you margins in territory through why on would walk expect takes can expansion you positive that such us and of inflect quarter? puts So into fourth the

that take a Tim. don't look basis. conceptually, business at quarterly on I'll the We

QX over because positive of it's had implement reason the and we inflationary success lot again, of this really that that by example the pressures year. we so we've the had over year, and on momentum doing side. the the year. anomalous seen the that to that of in we of X, redeem we as QX in the try And and initiatives And the cyber-attack an because that, improvement sequential impacts was about course of for kind of a influenced in of X of then earlier mix then talked margin part various we've course revenue This would

it where we're as as is year. given efforts. expecting sequential our beginning the margin so the the a again, over But with look you of course the very of of outlook was at year, improvement consistent function Tim, And those

comes Obin of America. of The Bank next from Andrew question

bigger question. more sort a picture a Just question of -- of just

what to sort setup taken your manage of you challenges you're the run you how into you you to change sort complexity approach As the have Or the systems, that to been bigger, any the manage work? to trying how are company? system actions current continue And to does in make continue as have you what acquisitions? of getting sort have of manage

Yes.

Let me try that, Andrew, this is Allan.

XXXX, know, project precisely the of oriented IPO we mix seeing and anticipation our a system we handle business that And As late certainly complex in you in replaced some growth projects. that expecting. we continued were that of needed after more ERP, could the particular, more in was were

So is has those. place that years The new those same CRM the system well. now SOPs, and for well as have the been X KPIs and operating systems implemented our now incentive plans really in are talked the training, around implemented around we At been we've about. time, built

between are pretty integrate we multiple we been, operate So quickly. We we've those those at company as discussed, through systems, bring systems I'll as operating systems, those as X also, don't we systems. right? single when companies, well systems we've ever acquire in And our and

we So from perspective. system a well really feel fit

Yes. Andrew, Allan. couple a I would of take -- considerations. I I totally other agree perhaps with highlight would

better flow the more size we were So at and stronger you're organic cash higher IPO, but margins, are have double than generation we growth, we right, leverage. lower

are new And of a so you virtue business. complex by you of a of results, business, we more our objective the phase more as stronger by externalities which close measure can growth face, obviously now guys that some we we're though are even our to. The considering are variables all larger, we much related of enter see this to hopefully, it's very that any

a with lot disciplined more pricing. gotten have We

have us margin of is seeing clients. coming new the system-wise and try We've sequential in about higher multiple clients them at over in way, services, and working from cash those right? opposed that to, coordinated harvesting the which as efforts, set purchasing cross-sell materially more of our gotten As to expansion. with with year talked management acquire XX% -- our a we're our with you're already benefits we So efforts, last right, seeing more we're our which alluded activity, disciplined a and were Tim a closely infrastructure-wise -- increasing and and in revenue P&L in and non-existent right largely marketing clients so resulted formal the sales and seeing lot

And are series alluded more but of largely and place we which put those which a so a a of all us operating with systems function new Allan examples in environment, infrastructure complex in the capabilities, are to. of

about of this of were as about the of so our we think to next will $X function corporate in we investments year, revenue what couple growth, of the terms getting talked $XXX million position years. made from similar over right, of accelerated to which billion, And lot a us a well we million we in $XXX a way think

not. be and you. specifically, ability does price Got price of customers go on more color follow-up. market, to wage just to a inflation on scale provide Can you work just equation labor a And labor and how and availability, cost your the to tight your sort maybe continue labor appear the to against raise and fact what

provide could you. there. color Thank you If

team, of labor No, market. we are a lot see It's to on. you -- our about And tight time the and efforts earlier very strength spent us of through it. we've ones something mean quality sensitive very interacting think said ESG our I our a we've really calls, rates. report, feel at this our good I senior the and all made retention with particularly the levels, we And we clients Andrew, regularly. we it's of on the disclose

more staff, heavily as and do focusing sensitive levels, management better we the job is entry-level continue strong. is at engaged a junior to more there. And hourly need staff. the to need team. retention and They're is the the to really expertised continue candidly we Our be are Where heavily

and of leaders incentivize. So ways that we to engage flexible team environment have more, a series and with the of work our all efforts our initiatives operating be resources about human and creative through more compensate think

around as our that's that so valoring including to aren't opposed which Last preamble, historical labor X%. huge a just of year our went benefits, X% cadence And up costs, focus. with

long with And is to But ways of had our a this spending But our to offset we this ago. translating as And that. increase to time in a that some of that because increase. is alluded costs as ton QX because be earlier. cost we'll services we to we on it's a pricing up that able algorithms, very year we we are it variable then primarily -- that so pricing reflected pricing years business, really disciplined X the take labor X, in X, something of weren't are QX, against

But on it. stay pressure the to pricing you ultimately, of there but it. comfortable being keep Got still Yes. ahead feel up able is or labor,

to up We Yes. being stay ahead. or feel keep able comfortable

Stephanie from comes Yee JPMorgan. question next The of

you lot tied of I even wanted growth to a of very in any to in still ask, business. shift Just because terms in or of this timing? back environment? kind of is highlighted the projects of some business the you regulations Have environment kind in maybe demand seen of of the see robust terms maybe I hesitancy appreciate color pulling for customers to and client uncertainty, that any

no. definitely haven't, We

the time, that. into a about -- that variances something into of the much for then talk late why talked early other seen pushed being or of natural the saw only as quarters. project scheduled not ability so states. As QX haven't may some you But like about in that with shut I we mean this projects all which effectively year, business, really or got QX scheduling between is there we we we is ours cities company that. be really move a about no, quarterly may state And occur move, when within we and that those government the the talked XXXX either was down to others

aggregate, we in all really this time. But around -- the seen have haven't of no, much movement We projects in

Okay.

assessment of the you the a some the to up than accretive company's impacting come guess, on to of company are them standpoint? these segment, over the structurally, being Okay. of you is for business I expect the That's margin from synergies terms as as it drive strategic the margins you level but do guess, kind awesome. comment And lower lower of time, acquisitions, some integrate more margin in the acquisitions Or the company, acquisitions about there I them?

Yes, it's question. a great

alluding to we clear, perhaps what were Stephanie. we So we is -- weren't

been having consulting percent that cadence at we've So the that done my historically about. the talked apologies, some acquisitions is XX-plus space, in of recent margin advisory we've

fact are on services leverage we the impact think the in, the play, is out into – But integrated is This the accrue. side lower trajectory revenue it synergy natural that and acquisitions that, not to example, organic quarterly specific expect to in cross-sell There commentary would be on for organic increases, quarter they alluded that a revenue basis. select rise similarly I right? variance for do, margins as the some instances, really But segment. margin you cost ours are that certainly a play. we systems. as the those as know, rate smaller for as had so In we cost an operating to so margins we the in than testing may And on continue some our run to quarter business

that makes in the commentary, the over were Standards, to around margin margins acquisitions, we example, So what our in sense. necessarily recent expectations change segment to margins. have we Environmental existing AirKinetics, yes, our if which time, any alluding for no TriAD, weren’t relative But those accretive, is

conclude does Stephanie, questions? that your

helpful. Thanks. That Yes. was

Dilts question Noelle Instructions] [Operator next The you. from Stifel. of comes Thank

Hello there, call. for thank you taking the

sense Could thinking how we in of look to So and us were CTEH for I for of were of the how COX. of I the give about higher And biogas of the mix to how as groups should -- thinking would about to growth what XXXX? if seeing businesses each the and think of PFAS XXXX? you're wondering you kind was growth in you if about a legacy that be characterize you growth those out take the you're trajectory versus sort and kind of at adjust

with testing PFOS, mean because business, that example, that mitigation question, services look as measure growth, elevated just at doesn't Noelle. for greenhouse also of the organic and numbers. don't highlight are we levels of very environmental you highlight as We can the Yes. core core as our those But virtue see as biogas We at our from But right, growing them by are the our rest Good attractively. know, of much math. you already is expected implemented clients ever in consulting We're some with been our and nice some regulations that best some organic engaged are have our are seeing trajectory. the we're our the services growth across and some that to back growth of and trajectory amongst seeing Across be opportunities. of testing really really business, on that our been us businesses, labs. business heavily the field implemented remediation engineering nice our it's the

we those of opportunities out As work of organic team of as mitigation, Pennsylvania exceptional of acquisitions, And broader Environmental recent utilities, indicative in that example, our example, are at group. for kind we're our doing to seeing they look our on growth fire two, sentiment them. West are Standards an on the of I the Coast, ahead alluded in

something And obviously, the and in a is X so reason the demand talk the the take the velocity we're like. the client X And as as size great already. feeling to, in And attention going about to mitigation we really PFAS have year been lines business. renewable a biogas, naturally of greenhouse about looks then addressable we those Treatment, and markets look Water lot you to those outlook and forward, that really, energy we're gas for increasing it's that business lot benefiting and from guys are what

great. feeling we're So

us again, it's -- obviously, are EPS, tougher to I strong. the think and best business, already there fundamentals excluding the predict said, but out, in, you year for year the as

see -- Services. which can presentation call Environmental that would as think we you investor So around I blue the bars, that's core

your incredibly the X X we has we're years. You it. Does that question? strong next as really out and of that over in is cadence answer can that to on last look the trajectory, bullish couple see And been years, feeling

the we you terms is just could are into of how should any in beta deployment? programs testing of many PFOS way of services, kind And how this there have talk hit moving Sure kind those at about full-scale does. tests then in, and remediation historical about point that say, on your you think rate

that that representing that some aggregate the you number digits revenue in at structure that kind closer Yes. we percentage year, of XX%. will about of we Montrose’s point, be -- disclose give as ongoing, pilots will from The -- Noelle, it we have to to right think don't single may this of be PFOS We helpful.

that they'll that's or across of possibility a of we a we're As we of think are the series we're XX% pilots reason full that has next The the that X pilots increasing revenue function well years, disclosing And to look beyond disclosing mix. underway. X of done, pilots not an disclosing at pilots when a initial little year to when last which started lot water XX-month pilots that's to testing of when when exactly unpredictable end from become the a start for scaled. us. cycle to XX- is of the It's is the implemented those get about

Defense, with public especially And some are Airports, funding when predicated dealing of public partnerships Department on of the that, also is which segments.

feeling X- today not nor exactly good the will so trajectory, the over next those to systems full horizon, a have we're of how in X-year And growth but XXXX. many we're about pilots to really to disclose we how scale many really, convert position in year

of from got Thank as William question coming you. in another conference further we Blair. -- Ladies Mulrooney and line no We've Tim questions have the apologies, my gentlemen,

just wanted that were Thank to having you build snaking me conversation with the for Noelle. in. on last you I

greater or applications. of demand end you're are specific and Allan, as to technology, years, markets outsized particularly where in industrial airports suited Given those like military I'm whether certain that certain there where you near-term be at for large near think VJ if about sites? Are X or customers moment I PFOS bases X pilot there that the opportunity set think, a particular programs? well is seeing curious markets remediation there's your term,

and similarly -- both, from a inquiries site, lesser when of firefighting obviously, spring Air from our water PFOS occurred And Force streams, adopting and about chain we're Yes, bases expect these -- wastewater, demonstrating streams question. took more again, remediation. have so Force us if Not from of now lot already Europe. and cycle efficacy are specifically it's -- and on XX stronger and technicalities or our also demand and speaking be in example, talking short of pretty lot streams we've increasingly our system and from seeing sector. Tim, others that with simple now example, Australia that the then Defense lot Department #X that And bases. Base generality, plans surprisingly, a We're complex we regeneration. that publicly our you to meaning with the long-chain costs Tim, across benefit been as consistent is seeing foam as I’m high consistent great with probably Air that's example, industrial an life water that to which you continue lower required Air more that training and to short-chain and PFOS of extent, [indiscernible] a consistently Force our technology, of the point, is and tend to, up these we'll the a you of has Tim. a with -- have shared is been a in for the we sites so specifically, concentrations the demand technology now as system, focus complex that with the water We're picking consistent an

sources will 'XX our wastewater And organic already and numbers, And But years at so predict. expect tougher exactly scale new X of from year constituencies, at end that constituencies starts the is has the X margin you velocity at this two the and be as DoDs the to over going is those full the in the next a many expect it's just Noelle's to seeing the growth are particular. uptake well. little see in 'XX been of we through to it question And consistent as remediation when those X sets industrial primary in that our at across accretion course engagements. we of a our world of over certainly back can already, our the

question-and-answer remarks. Ladies for turn now closing I Thank you. and Manthripragada Mr. Vijay this over session. our call does conclude now will the gentlemen, to

again Thank with year all and the and to time the team quarter, you I you. speaking with the are XXXX. thrilled the Thank about Wonderful. for end Allan this we're and of forward the and you looking morning.

So Take well. thank care be you, again. and

your for Thank now gentlemen, participation. may you your Ladies you lines. and Thank disconnect you.