Montrose Environmental Group (MEG 8.49%), a provider of environmental consulting, measurement, and remediation services, released its second-quarter earnings on August 6, 2025. The standout news was a substantial beat on both non-GAAP EPS and GAAP revenue. Earnings per share (EPS) on a non-GAAP basis reached $0.63, far better than the expected loss of $0.18. GAAP revenue climbed to $234.5 million, topping analyst estimates by nearly $46 million. The company raised its full-year 2025 guidance, increasing expected revenue to a range of $795.0 million to $835.0 million and Consolidated Adjusted EBITDA (non-GAAP) to a range of $111.0 million to $117.0 million, citing strong results and momentum across business lines. Management attributed the outperformance to robust organic growth, a favorable project mix, significant environmental emergency response activity, and contributions from recent acquisitions. Altogether, it was a quarter marked by record results in revenue, profitability, and margin improvement.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS – Diluted (Non-GAAP) | $0.63 | $(0.18) | $0.20 | 215.0 % |
| Revenue (GAAP) | $234.5 million | $188.7 million | $173.3 million | 35.3 % |
| Consolidated Adjusted EBITDA (Non-GAAP) | $39.6 million | $23.3 million | 69.8 % | |
| Adjusted Net Income (Non-GAAP) | $27.4 million | $10.8 million | 153.7 % | |
| Net Income (GAAP) | $18.4 million | $(10.2 million) | NM |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
What Montrose Environmental Group Does and Why It Matters
Montrose Environmental Group specializes in services that help clients comply with environmental regulations, measure pollution, and remediate contaminated sites. Its work includes environmental consulting, laboratory analysis (such as air and water testing), emergency response for hazardous releases, and clean-up projects for contaminated land and water sources. The company divides its business into three segments: Assessment, Permitting and Response; Measurement and Analysis; and Remediation and Reuse.
Recent years have seen the company focus on several big success factors. Securing business that is non-discretionary—meaning clients must comply with regulations regardless of the economic climate—gives Montrose a resilient revenue stream. Innovation in technologies, like advanced air monitoring and specialty contaminant removal (including proprietary treatment for per- and polyfluoroalkyl substances, or PFAS), helps set the firm apart. Persistent growth through both organic expansion and acquisitions, paired with a disciplined approach to cash and capital, rounds out its current strategy. Serving more than 6,300 clients and maintaining a high client retention rate also contribute to its ability to weather market cycles.
Key Developments and Metrics from the Quarter
The second quarter was marked by clear outperformance across all financial dimensions. The company’s GAAP revenue not only surpassed analyst expectations but also grew 35.3% year-over-year. The largest contributor to this increase was environmental emergency response activity, which accounted for $48.5 million, up sharply from $12.9 million in Q2 2024. Excluding this one-off boost, healthy organic growth added $17.1 million, while acquisitions contributed $9.1 million in revenue.
Profitability metrics also showed notable gains. Adjusted EBITDA (non-GAAP) climbed 69.8% year-over-year, and adjusted net income (non-GAAP) more than doubled to $27.4 million. The company swung from a net loss one year earlier to positive net income (GAAP) of $18.4 million. Each of its three service segments—Assessment, Permitting and Response; Measurement and Analysis; and Remediation and Reuse—reported year-over-year growth in both sales and Segment Adjusted EBITDA margins (non-GAAP). Notably, the Measurement and Analysis segment, which covers laboratory and field testing, achieved a margin increase from 22.5% in Q2 2024 to 29.1% in Q2 2025, reflecting operating efficiencies and a favorable shift in project mix.
Net cash provided by operating activities for the six months ended June 30, 2025, was $27.4 million, an improvement of $48.5 million compared to the prior-year period. At the end of Q2 2025, the company had $242.8 million in available liquidity. Part of this financial flexibility was deployed in July 2025 to retire $62.2 million of Series A-2 Preferred Stock, an action that simplified Montrose’s capital structure and eliminated future preferred dividend obligations. Average diluted shares outstanding increased compared to last year’s period, mainly due to equity conversions and the impact of a lower share price, which resulted in higher common share issuance related to preferred conversions.
Looking at margins, the average reportable segment Adjusted EBITDA margin improved to 23.8% from 19.6% in Q2 2025 versus Q2 2024, supported by both higher revenues and improved efficiencies. Each business segment saw higher adjusted EBITDA margins, reinforcing the overall margin expansion trend. While this margin improvement is significant, a normalization is likely if future quarters do not see similarly elevated levels of emergency response activity.
Innovation and regulatory alignment continue to underpin the company's growth. For example, PFAS-related revenue, which stems from environmental work targeting these hard-to-treat contaminants, represented about 10–15% of total sales and has grown for five consecutive quarters as of Q1 2025. This growth aligns with rising government enforcement and new state-level mandates. Management highlighted that the company’s technology, adaptable to changing PFAS legal thresholds, positions it well for future regulatory shifts.
Montrose’s acquisition strategy remained active, with bought companies adding to both revenue and expanded service offerings. Over the first six months of 2025, acquisitions delivered $22.5 million in additional sales, reinforcing Montrose’s presence in a fragmented and growing industry. Early redemption of preferred shares also brought the company’s leverage ratio to 2.5x as of Q2 2025 (with a pro forma estimate of 3.0x after the redemption), which remains within management’s targets for maintaining balance sheet flexibility as it resumes deal-making activity.
There were no newly declared dividends or increases. The recent retirement of preferred stock reduces future dividend obligations. MEG does not currently pay a dividend.
Looking Ahead: Guidance and Watchpoints for Investors
Management raised full-year 2025 guidance following strong second-quarter results, increasing expected revenue to a range of $795.0 million to $835.0 million and Consolidated Adjusted EBITDA (non-GAAP) to a range of $111.0 million to $117.0 million. The company now projects revenue in the range of $795.0 million to $835.0 million for full-year 2025, compared to its previous guidance of $735.0 million to $785.0 million. At the midpoint, this reflects 17% growth in revenue over full-year 2024. Consolidated adjusted EBITDA (non-GAAP) guidance was also raised to $111 million to $117 million (from $103 million to $110 million) for full-year 2025, suggesting 19% growth at the midpoint.
Looking forward, the main areas for investors to monitor include the sustainability of the elevated margins achieved this quarter, the episodic nature of environmental emergency response revenue, and the integration of recent acquisitions. Other points to watch include trends in accounts receivable and cash collection cycles, as both remain material to liquidity. The company’s outlook is buoyed by regulatory drivers—especially continued focus on PFAS—and a diversified set of services.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
