Montrose Environmental (MEG) 9 Aug 232023 Q2 Earnings call transcript

Good day, and welcome to the Montrose Environmental Group, Inc.

Second Quarter 2023 Earnings Conference Call. Today, all participants will be in a listen-only mode. [Operator Instructions] Please note that today's event is being recorded. At this time, I would like to turn the conference over to Rodny Nacier, Investor Relations. ahead. go Please

Welcome operator. second XXXX quarter Thank to call. earnings you, our

Vijay the Allan President Officer. on me Manthripragada, Dicks, call Financial and Joining Officer; are our Executive and Chief Chief

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

Our is on also the earnings release available website.

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

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

Slide beginning that, turn would call I on over to like now X. the With Vijay, to

Q&A. will highlights. you will on earnings the and quarter joining Thank generally provide open highlights, and us you our I I to business you, welcome Rodny, financial with today. you we to then Allan will shared website. to provide with up speak presentation will of all second it

Before basis, it on for would is driven to demand business like environmental specifically, annual an typically assessed We and an is on our by to speak best given not manage we services reiterate patterns. QX we annual quarterly results our business I basis, being as Without how well. would view is world you. around approximately our colleagues here be efforts, whom belong. To wouldn't stellar to you you our to all of listening, like we also X,XXX I results today. these thank recommend thank the that their

XXXX the for that part expand which that a is With full are core of start, a we few a in further very minutes. Allan taking context, why on year, is strong up and to off will guidance

our million, QX Our adjusted consolidated QX million. EBITDA was $XXX.X revenue was $XX.X and

The key built strength first I'd business themes, second further. quarter saw several and is to on highlight factors like to quarter our which our strength The and due continued in outperformance, which momentum.

XXXX focused over highly revenue years, have EBITDA past accelerated given our growth optimizing on few First, we organic adjusted the margins.

as just changed. organic long-term have strategy they as growth opportunities and been, not attractive are objectives our always Our and have

our XX.X%, EBITDA revenue X% segment last result growth most and respectively, consolidated During the margins adjusted is service of of EBITDA year. in our the XX.X% were versus represent adjusted This adjusted operating margins strong EBITDA QX XXXX, lines. and increase approximately in margins an which in improvement

efforts. in noncore technology differentiates our marketplace energy our examples on addition, of and service to portfolio are and or The have June further investment the opportunities as which in renewable these services businesses offerings advantages, and In scale. us margin our in of bolster we enhances focused our refined TreaTech low-margin discontinuation

anticipated environmental our and The on given second attractive business. tailwinds, opportunities stewardship. our create tailwinds regulations theme clients' to growth voluntary environmental across continue focus and new These is continued

demand the for response emergencies. $XX theme cadence several million compared per to increase provided million services is year third their the to The year remains by environmental $XX to revenue typical in elevated prominent due CTEH. this environmental CTEH

fourth benefit our made years theme business we growth organic in from The investments is prior continued the in inorganic and to opportunities.

Our and so notable our this had have R&D year. on investments into a software far business impact testing

opportunities addition, for GreenPath just and and Vandrensning, was clients. provide to recent continue of which acquisitions will our In Matrix, the announced, teams great

And sheet convert ample people business. flow, continue investing is well us remains cash EBITDA flexibility our over operating of giving to we continue our balance finally, to strong, which in into our XX% and adjusted and

Our balance current environment. rising remains rate interest hedged against insulating the rates, uncertain from sheet us

discuss now XXXX services will as revenue engaged and stewardship longer-term, Within to by given environmental from is run quarter as through advisory the client our compliance. they Response which see focus on were for CTEH, performed CTEH, Permitting organic the on performance positive and our excluding segment, Assessment, We numerous remain response segment. segment, strong high-profile emergency second growth bullish levels acquisitions. well in environmental opportunities contributions I we the outlook pleased quarter during and as our in above our rate projects. very

CTEH service, Our delivered has always. team exceptional as

in driven and segment environmental higher-margin growth services; this CTEH's in one, increase to advisory two, margin was our by: shift services. response Our organic

Analysis in and mitigation. and services and testing growth revenue as Measurement gas organic such our our areas segment, measurement for strong, Within very greenhouse remains demand particularly

May, as technical market in our with the X expanding announced partnerships, and commercial Fisher Our Thermo reach. are increasing such

building segment margins remain previously discussed. to annual elevated the opportunities compared years, segment we as percent increased segment. have pipeline, we Given prior to this to are XX-ish remain quarterly high-teens the expected are in upbeat continued in about and regulatory in this margins Though

lower segment, due and organic offset finally, And expected ECTX soil Remediation the our moderation remediation shifted Renewable our energy Within revenue subsurface margin demand. have growth the for and business, Energy notable technology within treatment opportunities is services. and or Reuse of which our services, contribution acquisitions there revenue, business, in to and water Biogas flat we our in higher our which from was encompass renewable away which

anchored resembles therefore, scalable and conviction technology more more in we higher a in their streams approach why on invested have to plan team resources. to to pivoting various TreaTech, valuable at more treatment, and is water our to transform that we apply waste as proprietary margins. and differentiated client we This property are model their intellectual help We into

but This opportunity margin-accretive to in revenue temporarily ways. enable the approach shift segment more in in to growth us year-over-year will quarters, in scale long-term will and coming in market capture the medium it the depress

been water technology our business, PFAS our highly regulations and to approach. treatment Within the favorable have recent

contaminant values index they many for in so newly proposed levels, along uncertainty clients. However, are cases, near-term hazardous with challenges our the creating and are, that low

case into about Montrose use of Matrix opportunities clients Allan of June how cross-selling their temporarily slightly, depressed have the join noted options our result, study the The a Matrix segment. reflecting As will also creates as of for complying with complexity standards. assessing us. more forward quarters. and that timelines margins Matrix margins and transition as next in Montrose few a and shifted in new project the acquisition with we details in are you But out teams the increases we to look of sharing these earlier, I

our discuss targeting increase focus a With in which methane EPA monitoring that Inventory regards on PFAS flares, to continues testing Land and consulting growth triggers the long-term These I'd the incremental and for now into and finalized program, final are to emissions services. and slated The assessment Toxic regulatory such Release our updates rule quarter, June, future emissions, likely to to to become demand EPA support as like X outlook. our reporting of Bureau for demand new annual methane third recent should and and have PFAS, few requirements vents the a services. US industry chemicals rules support which leaks. incorporating trends measurement, additional and emissions, in rules Management is

increased the drive environmental pipeline These actions, the Regarding impacting our We underserved campaign and efforts anticipate over that these testing demand clients. advance our EPA for and the services. well [indiscernible] clean as in environmental advisory to environmental we've July, to our growing will justice a highlighted past regulatory technology demand reflect communities for quarters, across billion as promote those consulting emissions recent the country. $XX launched services. In several

anticipated many proposals are these in of demand the the our While growth for in services. underpin early phase, they further rule-making

you, our to realm, look this found I this on of would so we further. our our more engaging details I We also endeavor a our be publication for Many on to report, investors, have progress week Before forward sustainability the on activities reporting efforts. we in to you and with asked highlight conclude, like moment website. XXXX of to can and last issued take which our

on summary, to clients. again team their In for behalf I our all like the to I incredibly would grateful remain thank of of once Montrose you. efforts

strong and our EBITDA. year of first second are result XXXX consolidated third adjusted performance outlook As for and increasing a quarter in and start we and our positive full guidance quarter, revenue this our in

business value. to remain the Thank ability shareholder our optimistic opportunity you we ahead, create in Looking continued our and for continue to so. doing

you. that, it to will Allan. Thank With over I hand

of with Thank across services tailwinds model. strong reflecting and growth our organic quarter, continued success environmental we're service and you, integrated most the strong economic seeing our second The the lines regulatory Vijay. business in

environmental years solutions ago our play the gained has significant see the to momentum since for out continue as world. We themes X need we've around the discussed IPO

quarter. growth remain strong during cross-selling and the helped harvest Our intact our benefits drivers margin drive M&A of and strategies, revenue continue growth to which as the our expansion we

saw Moving to drive to We in of growth our record levels on Slide most quarter. lines second the our X. across revenue performance business revenues

$XXX.X was the in impacted our year-to-date was Year-to-date in the increase revenues in the our from Permitting million. partially and planned Measurement our Remediation contributions growth an revenues the both periods quarter. positive The quarter also driver Analysis of and CTEH segments, up revenue XXXX. to offset and Assessment, from second This and were year Response was Growth X.X% exit projects period and in organic discontinuing year growth primary are of in our to and lower specialty acquisitions. Our Reuse by in million versus prior revenues O&M compared we legacy timing by lab revenues in contracts $XXX.X XX.X% prior our to revenue increased segment.

quarter million up and Excluding to up revenue in second was X.X% the million $XXX.X to revenue year-to-date. businesses, was from discontinued $XXX.X XX.X%

performance Looking Slide at our adjusted X. EBITDA on consolidated

million by in revenue. This and the well Second revenue year-over-year was by benefit as prior EBITDA million, favorable adjusted business $XX.X driven year quarter CTEH. in a was of revenues higher in mix line adjusted the XX.X% consolidated driven margins, to The as of of part or pricing XX.X% record improvement EBITDA consolidated higher quarter. $XX.X of compares or the shift

was of EBITDA compared a adjusted EBITDA loss to consolidated point of or XX% and prior XX.X% lab we $XX.X revenue are consolidated improvement. year, Excluding EBITDA the was $XX.X to XXX the adjusted adjusted revenue consolidated EBITDA of representing in or revenue from of million XX.X% revenue. basis compared discontinuing, million XX.X% Year-to-date,

in from basis point was XXXX revenue of months and Excluding improvement. year EBITDA of we adjusted prior $XX.X million in which $XX.X consolidated the XX.X% are revenues, the million and respectively, represented the first X discontinuing, period, to XX.X% XXX adjusted lab EBITDA compared a

Montrose's said, that that reemphasize as of annual assessed always performance needs annually With not are to performance. quarterly be indicative results I'll

XX. Slides business our to Turning segments and XX on

is we With absolute highlighted remain and margins. service to of adjusted focused eye an EBITDA, which this that growth, increased to operating $XX.X million. year-over-year XXX The margin basis pleased increase Assessment, cash driven contribute adjusted XX.X% with in portfolio, the we XX.X%. Permitting segment. primarily last dollar balancing our In our point the organic a on optimizing generation extent, segment's As Response EBITDA in operating and the acquisitions. growth towards contributions helped CTEH flow shifts from mind, year-over-year to and for to to was lesser longer-term increase see impact revenues our positive quarter, segment, were to targets in we by entirely

fully revenues that business' environmental increase response here. are captured So in

of mix quarter, XX% aggregate to year-over-year within revenue million, of and or revenue, the reflecting segment. XX.X% EBITDA growth, benefits XX.X% higher year AP&R across CTEH the favorable organic our from the segment increased up in margins $XX.X other prior businesses adjusted

revenue, the million, end to completed $XX.X M&A increased the well our strong segment of In the at reflecting contracts the in year the the XX.X% flat and for XX.X% year-over-year to growth anticipated Biogas organic ECTX from pricing year the prior our from actions. $XX.X quarter. adjusted testing as quarter, strong prior million quarter. the acquisition Reuse benefit up attributable business benefits or discontinued as revenues Analysis exiting were Remediation Measurement XX.X% segment, acquisitions of to services and fully well to In of and segment, increased benefits as offsetting Matrix our Water with our prior of in million, $XX.X subsequent the in from revenue decline year June our EBITDA as the demand XX.X% primarily and in O&M

adjusted result a as in EBITDA dilutive percent of including mix, in revenue the revenue a shift R&R segment decrease The Matrix. was of of impact the

efforts the low- improve set to from on are which end digits by the is to margin optimization XXXX. Our EBITDA to at track mid-teens mid-single adjusted margins of Matrix,

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

activities these build X million first capital in This activities before was increase of operating year to compared higher in million to the months from a first the primarily earnings of driven $XX.X lower the working Excluding period. noncash months items XXXX acquisition-related cash cash $X.X increase of million. operating prior XXXX, by compared was an of from X payments, and $XX.X

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

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

availability our million revolving current our entered X.X% June of of including million quarter-end, our $XXX.X million At on credit rising issuance on under was additional debt and of At borrowing of liquidity, into had During debt to we swaps, million inclusive interest million rate of interest our weighted of at with rates total facility borrowing. swap before the interest $XXX leverage an as of debt second we $XX on rate and rate interest million quarter, levels. cash average facility. costs $XXX.X our ratio a under $XX.X exposure our XX, and XXXX, credit fixed current no of rate $XXX

maturity AX no preferred Series Our has date. stock

The of not the favorable a its dividend cash. preferred We the in any creation rate time environment. dynamics have option, shares business, rising for obligation, prepayment the at April fixed potential nature preferred redeem instrument expired year. to as We an given and view flexible but this equity in value penalty interest to the this in the the of

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

year issued our full the million for $XXX growth range up guidance million. improved on range raising to $XXX full be in guidance previously million. our Slide to our $XX we previously $XXX EBITDA be issued of our revenue to the million half in to $XX year to million Based outlook And $XX in for to outlook the full XX. are of $XX XXXX, million, range from up to raising we are Moving adjusted from performance consolidated million of outlook of strong $XXX on first year of range million, the

higher EBITDA adjusted represents double-digit prior year margin and year. growth and the for Our over expansion revenue outlook consolidated full the

looking addition, year, the stronger EBITDA we the revenues and at the remainder XXXX. the of quarter to quarter In of compared fourth third be to expect adjusted in

for see and to our ability value, for and are the sustainably Operator, differentiated in model the and our and interest our Montrose, the need you to optimistic to us hard progress to thank driving members for and of expanding you in forward Thank given continued opportunities our you to resiliency We a business environmental ahead joining remain create about the in ready business your solid solutions. results. on all our updating momentum we for quarter. big next our We shareholder today look we work their team all questions. open lines our the

Today's Company. Instructions] [Operator comes & with Needham from Jim first question Ricchiuti

I just year get full Matrix your contribution was to changes of will, Montrose, hoping better the to from relates to better as legacy guidance. a it -- if and the expected in get the a was I sense hoping you

Jim, That of revenue and seasonality $XX just Allan. Matrix annual Yes, hey million an about in on million at -- of tends terms be to of basis Matrix $XX to of EBITDA. weighted, that back-end million runs this $X.X is the business.

than more $X.X of And... little baked million that a half the is So guidance. updated into

You may was right? it in? I have did given and number provide of quarter the month, the X for it. you Did they portion was any -- contribution think Matrix

Yes, Yes. $X month. running That's X% June. of to revenue, -- margins $X million X the million We it's in X% didn't right. month of about to

And just question. it. a follow-up Got

the to the bit. Reuse the relates segment, I'm could elaborate of you some and little issues it a and as wondering timing Remediation that if Just around projects on

is this Vijay. Jim, Yes.

We which of about that, have and primarily -- our we're business the ECTX we talk is when a to Water combination referring business. Biogas

to have look the which in, some some projects these what cause out, annual an roll slight on would off, on of quarterly basis you may variance so like. either or And because at roll quarter look more quarter that comparisons in

And it. in the wanted you it I And announced relates the out are just business ECTX, the over that? of follow the ECTX about on acquisition year, balance Denmark. to just up yesterday you is as to Got as think feeling also about you looking how

sure maybe I more that cursory the went Even ECTX as apparent combined website. Google function, and through I this on look the the than business benefits had translation I'm of their are

to business, that give you're you could sense if the in part just wonder us what I as Vijay. seeing So a of

Yes. Sure.

spoke talked we about part this the the the which provided year, the of year, when the flat our to at of Biogas we of solution. and long-term technology-anchored -- particular first towards being combination Biogas that question Let guidance the over more first question, quarters Jim, our me part is business. desire last Water The take the pivot couple of in And we beginning of right? business a about

So that. doing we're exactly kind of

will if down bullish flat. solutions, the we Biogas just as outlook but ever, And part, particular, our in is pivot for the long-term ongoing of optimization So business be And as efforts. fully year-on-year, be that margin will the technology to that's part us Jim.

only it And very announced, on just which efforts complementary the small And relates ongoing Copenhagen. to it's they're we're with -- talked continue not how grow team, our And of with just today, team, technology a Scandinavia. what to the very they to doing outside Vandrensning, our that a we utilizing then PFAS about group excited in but ground really slightly with before. can you about they're as already it's we've

Got it. I'll back queue. jump in the

Thanks, Jim.

question comes from Mulrooney next Blair. Tim with William Our

Sam I start, you I to by Kusswurm for Matrix mid-teens to XXXX. This up on is to to guess you range Tim. bring margins shared know expect low-

Now that with the that some trying more, you would what to sharing time drive you're margin make changes work you've acquisition to to expansion? had specifically mind

The business Sam, to Yes. have Sure. is in it's that we we Matrix many smaller to in Allan. very run a the extent, businesses similar Canada. lesser a business and U.S.,

should similar and And tend the to mid-teens. run they so to really the margin businesses, in those profile be

of aligning indicators if some And those we've cross-utilization key and dive pricing, pricing, businesses. that, the we to up of run of performance for So of them. all improve KPIs. our combine other done margins And us you a enable cross-selling aligning where their all get pretty benefit you deep to on then should

the incredibly activities days, innovation caliber on early that, going but the well. by are impressed obviously and Matrix track team been So the we've and of

a that but that Sam, compelling these Matrix aligned cost with a not And this exactly is is management is talked particularly would about synergy how there story. about I what's team efforts. story the not only add XXX% exceptional, historically right. Allan's would add, I and narrative just the revenue we've

to when effort, so a very and and we're share expect more we earnings. to we excited report this of So QX you, is really this with collaborative do

forward your beyond? just fuel renewable business you. Biogas Got through you that was on pivoting and even thoughts might year finalization going had the Appreciate in the mean any the wondering for business. that. to the clients or what Maybe of Biogas, your on standard EPA's recent even I if and maybe relation

They the conversion business market of R&G negative is that the on [ has right Yes. CI a our broader ]. effect to Sam. -- And primarily the today ag now, waste

that are investment streams. we waste more the access in pretty about many With waste streams, TreaTech, the us excited to gives industrial including fact

exactly it. what which And market on a we the right, broader tailwinds been we we're is looks of it, about in cycle And bullish see of the for so like pretty couple next just kind here, over broader broad-based us see been we've -- demand and that in why years. you're we've talking

from with Obin Bank comes question Andrew of next America. Today's

Can you hear me?

yes. Hey Andrew,

to Just switching PFAS.

but they're state and think right? of big Chemours, there's in can is do of we're projects? system, I of water the you money later. in one, actually next water of quarter, amount authorities, fact the the I the sort appreciate not starting cleanup that of than into this the coming course, the to the sort any issues And having of a see highlighted DuPont, of large authorities finally about with notwithstanding sort settlement X, recently, out some over was X expect water years? nobody sooner terms actual That been upfront-loaded this authorities of timeline? I play you to money Are talks structure the these the just about you think XM, the conversations remediation give coming in. news, you for next rather color remediation And settlements, us to want PFAS. these any sense are how there aside, Can detect

themes a are of Andrew. couple I so that -- We highlighting, think worth Yes.

We you about. of talked the are close to many folks

in season. And The municipal settlements so in. just That's historically broadly an area we've [indiscernible] not efforts. we are treatment water, engaged been drinking primarily focused impact more

to the PFAS footprint and molecules short-chain us, high concentrations technology when a won't Where lower as of is play long-chain well and for part concerns short Andrew, hasn't really impact likely and no, desire a that's a and will around on of treatment and key process. our be. not answer So been the and focus of is kind there's focus

hasn't not that's is key short focus and us. is the key not for a a It answer been, focus. So

But sustained think push. there's we do

Todd is been that have watch of uncertainty going themes out interesting something that and I been how to react be we to technology kind closely. regulations have the to the of it come the on of talking ability portfolio. One regulations Allan, our But favor the broader the have in and is about our measure very clients much

answer short The really settlements outlook year that is So no. all don't our next. or this swing much

just Got a for and you. Remediation Reuse. And follow-up

think is just it? of but confirm, second I just visibility, thinking it into B, at about sort the material And near-term? that think model, how have to to our implies half. just view. sort -- obviously, way looking I of acceleration the on A, it, you've projects support touched just the And the on of this pipeline, you right is

Andrew, the it's year Thanks. Matrix expect a front be Good. part half, to do Allan. that. -- over of segment for half of back substantial that Yes. We but it's the Yes, up the driving is pretty

is to will then down And business, ECTX with back -- said, business our year-over-year. likely the be likely Vijay the pivot the Water has to front half similar the be business of half Biogas year. the As a have

Okay.

work. So have the They no. building Yes.

I'll Yes, offline. take it

Thanks, Andrew.

comes The Yee from with next question Stephanie JPMorgan.

to of out by projects PFAS the the the wanted around pushed some about I comments clients. ask being

to tremendous but of kind the of due of maybe shift missed timing year, projects. think team prior quarter, the time you thought in the guys to I absorb saw I and last those that so giving some I was it project the growth some

about quarter, if I'm quarter? project you it was something hearing we're something in call ongoing prior kind the out necessarily So that this was timelines the the that Or didn't in of that quarter? wondering it just was developed that just

one. Vijay. that Why I take is this Stephanie, don't

in We grew, XXXX. XXX% So you're call it, exactly organically right. over

scope end at project's what year the geographies wanted sure the last year, last only expanded and team's team for fact given systems quality to make as And So and and them, really the guidance would like. our this not even got the legs tripled but early and scale their -- was of size We team and the growth control for about when under of that, materially. incredible just we that talked desire this almost year part look that year reasons, the the reasons. and they of part discussions, also

So that still absolutely is true.

regarding continues on around there's regulations also EPA has in alluding at we QX expand, getting to all little the only clarity regulated is has stretched. to in been What as were the short-chain right, is trillion those parts QX, able not and that there happened, long-chain X to the lower per more the certainty which analytics down or being a measure to the capability how and or compounds, but

any these sense. result demand think slower, that talking as so us projects how solutions a if compliance to with of how going to about though of these what this know that? how even in higher, about makes are clients I Even there? going our these And get start And And our is, cycle is standards, is I the do do I'm is and regulated? execution

largely us, even measure question what how know I I'm there? around which to get but -- and do do now, absolutely it's not only like that largely practical how it's I around the And favors standards And to are, more react trying there? it a of

Okay.

acquisitions helpful. Denmark. then Does kind in give that kind very on a that Okay. [ the platform in Europe? just ] you does further That's acquisition announced And size it Europe? of of for And in the presence you of double ECTX

Yes.

footprint is European Our small. still very

and geography. answer continue clearly, for yes. know, operational a does project our our we're reasons, been is you European of as people and increase there, the dozen they're the into lot talking select Absolutely. demand there. More size really. very cautious, It reach about forward-leaning various expanding kind a projects. But on PFAS particularly We've regulations. or the very that team, ability Stephanie, so regulations, So There's to on expanding short of working of

Suki Capital Wade The question One. with comes next from

on got the And hate too business of worse the misunderstood less line a revenue of that may I in there I've you of to attractive, -- Matrix sort just about think gather, might to growth looking -- synergies. this, be and much. trying business parts be wondering out the was dwell context are if that about But of parts top talk I more just bit could maybe I more or on to little XXXX. but

lot Yes. United I'll remediation States. outlook -- in Allan, what what the side, scientists talk on engineers weighed We like. team kind conceptually about and in of of is on side this the looks we the here the jump certainly then have an a exceptional and consulting and team revenue like

I'll -- And give so at we as examples. look a simple you couple of

we're complementary utility States. and the the our work. on or As demand very some companies hydrogeology each cycles West meet of expertise of we energy works look Canada. we Or we regulations energy the understanding need some doing depth expertise These as and in are the work that in and other, the environmental as at to companies the United we of how at the to look continue right, teams and to in and terms how both stateside the of

between And clients Canadian that about and so switch kind make Does the when staff revenue sense? the marketplace. projects our for cross-utilizing that of we both we're synergies, talk about in U.S. talking

Yes, absolutely. That's great.

water but gas attractive. of find that mitigation business are when all only portfolio they you the and we growing also with greenhouse water a find not mean -- of say then like resource business Okay. experts, I -- they have depth management. parts also and assessment and with things are the remediation of attractive, we and they And a expertise they

we quarters Northern similar very made. but we issues. about California, couple in focused ones very so strategic acquisitions of on Small, had And a talked ago

teams. And of another so be going to complementarity that's between the there's where X example

to reasons, really in us bullish host we're platform of expand U.S. So that both as see Canadian a we and the for for markets. to and continue a

on as far our to right for is Wade, teams the As revenue the expect There getting now, more year, outlook really synergy really margins focus to flight. are of business rest together, next -- are continue. in we our that where well and But already working already their is. is the

bit Okay. Perfect. And here. just switching gears little a

front. doing That would on you're of a You've the you wondering fantastic. release in and that bit here software. what I'm if put presentation couple be teasers little expand could on press more a out on

fair Yes. It's a question.

began real-time [ media, other about acquisition of haven't -- air, We the environmental oxide, with much. our data is talked talking environmental aggregation is the the about on and clients EDP, data like that of gases playing really the Sensible contaminants to we measurement Wade. for greenhouse across formally and of presentation it We with more ] ethylene capability what seeing that And starting advantage. of we're as our

line ambient what in air and around. are testing able present mean clients time put largest that so communities to we world, our the to we're that real is source and to the that leak firms are information in X to able capabilities, And and we're our as together by fence the of I needed clients

sense? Does about it's and substantive advantage, in talk pretty the reason the way, up it a now more make to is we numbers. segment. and technological And that because more that's meaningful so moving it's Analysis And on Measurement starting manifesting show itself our our and in it's dial a

it. Appreciate much. very you Thank Absolutely.

[Operator Instructions] with Company. Ricchiuti The from a Jim question Needham next follow-up & is

Jim. Hey,

sir. Hello,

is line Your live.

that. be due just just possibly that broad to How in thinking the activity? Allan, of M&A how the about SG&A might want about the much we to in Sorry forward? just ask strokes, SG&A quarter. Or in going increase I step-up maybe about in

as of Jim, centralized breakdown from And driven sale. there's we've of to acquisitions. later G&A certain it's that the Q than we've change functions, level, cost operational But of G&A made like there by an a It's by they're driven that our as be be in a in a high back-office -- today. robust acting used will was decentralized. that filed those the Yes. pretty folks classification very at more

out. classified And switch was the are those costs year. numbers is the prior again, then activity than higher just it versus year there acquisition so in year. how a broken given this And year, this And last are higher yes,

anything a just And the about then business? should in keep of we is the go-forward basis, mind on your with SG&A, there scaling

And the the out in separating kind And way And has look do X% year, said future and below full to SG&A. we've Jim, of declining, commitment the Again, lower keep corporate we year expect this than Yes. it, for years. that to again, is or at we be at as it the of operations, X%. drive driven Those been that in -- nature that slightly the that not is operations. that given much in revenue. increases -- fixed It's rentals then resides the the our just given SG&A still support -- right? more reside they folks got fixed, so back-office and within really increase Again, inflationary an the those. by

be see year-over-year increase more modest should you going So also a that forward.

in of to apologize -- just the profile seen correct? business, contribution on. the calls performance that any about the you that you this better I gave here I on and got of the wondering mind Is keep margin the a quarter. work recent other couple question the for emergency that response they're nature of past. contributed certainly margin, if in this. gave if is and profile, CTEH of But going is you can Final work the I've we've guess doing the color if thing me, And to in than the the

of than Particularly The Yes, right? to half, that kind million COVID, about at But midpoint that's levels cadence right. had and normalized we right? stream. XX mean the for revenue much expect service closer typical Jim. the low their would they That's to response is think quarter, prominent quarter, I margin right, substantially more margin if last that these $XX-ish environmental in a kind of them. similar more XX% are they're we XX the a are work margins of year, of was queue, Jim. when the higher in elevated, for So you those numbers first were

] that [ back normal cadence XX% return Jim. year, to to them quarter XX% the of half expect in of to do we kind the of a back And

session. question-and-answer to our now Mr. back the to any I conference like Manthripragada remarks. concludes closing This for over turn Vijay would

you for again. with about Thank rest next for really the our the all you you. Thank Thank forward the to interest excited and year, of looking we're you. and conversation time in Montrose and the we're

and for has you disconnect. may attending Thank today's you now conference presentation, now The concluded.