MEG - Earnings call transcript Q4 2021 | Montrose Environmental Group, Inc.

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Operator

Greetings, welcome to Montrose Environmental Group Fourth Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require Operator assistance during the conference [Operator Instructions]. Please note this conference is being recorded. the to turn Investor Nacier now Relations. will conference Rodny over with I you. Thank

You may begin.

Rodny Nacier

to year our XXXX Welcome you. Thank full earnings and call. Quarter Fourth

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

we - discussion referring be env.com. is today, presentation, of our to Investor on the During section earnings website which will our our available at montrose

also release is available earnings website. on Our the

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

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

Vijay Manthripragada

you. over of year all to the full-year which am industry. environmental up leading for I grateful. I financial quarter you team with of further our belong Allan business discuss to excited provide you welcome pages their I able whom to generally to eight few presentation and Rodny, our it a and for of members speak review will Through provided then I it will am through Q$A. results breaking fourth today. Dicks, joining you, strong open our Thank the to the XXXX us were CFO, and hand to record Montrose's we'll and produce and the effort, to another world in results, to we around dedicated position very highlights

an a as I'd into before, not of basis on environmental well. we business the our like nature our noted manage we by driven we is for annual as being our best delve discussion how I annual results quarterly recommend assessed services to for business how view have given you of our performance, that patterns. reiterate is others An demand Before and basis and

year pandemic. for CTEH, than XX% given the CTEH we rate strong excluding We our and at and organic $X.X historical of cash In CTEH of average achieved converted ongoing in the terms billion XXXX Montrose. growth, the $XX flow, mid-to-high revenue, operating highest single-digit XX%, over exceptionally double-digit XXXX into year was over at organic here results, of in organic excluding achieved of financial my growth start million another including the our a since growth XX% impact The our the Montrose. time earnings of expected stronger is and

XX% of base objective excess XXXX million double business growing base think CTEH revenue, approximately our exceeded as of greatly growth business nearly over We annual with rate. also excluding base $XXX targeted almost XX% growth. of year-over-year, business We full-year revenue our our

business also a the put teams, excitement lot scaled pressure of future. expected, about on more but our which we created Our has than quickly

Our X% to outperformance measurement for per to result and in in driven X% our mitigation, in are a year, and particular. are waste-to-energy XXXX, to tailwinds across being related by growing remediation, XXXX industry expectations capabilities outperformance key all lines. services an business services and greenhouse of relative for gas our PFAS Demand continued direct our

This remain ESG initiatives, confidence our we have environmental enforcement, the stewardship XXXX and regulation government later corporate will As of which outlook, at better introduced in and on. newly policy. and C-suite is forefront Allan discuss environmental why

growth value added we several great on started our environmental great response of addition added before incredible drivers. with our strong segment. the and acquisitions XXXX in Montrose Complementary family team other with the talent a tail acquisitions of foot immediately and growth, to to as the to the value-creation driver organic key you assessment standards within and and accretive permitting have standards one team. We are teams discussed environmental addition XXXX service to remain key have In our Montrose such that capabilities

thesis eminent remain remains very robust unchanged. and strategy Our and pipeline our

clients, environment communities, our our stakeholders. air team statement drink, water increasingly members, the This to the Our us. we our and the is breath, is and is mission and that mission soil we business the our resonating with help feeds protect our

and stewardship. months, government we with trillion bill. already support $X are see catches the discussed market last arise business law from And to drivers continue into to for policy relevant were demand November. to bill sign We as our with we over infrastructure our announcements bipartisan the relative XX -- we've to seeing pleased the Biden President better resulting As market public up past see environmental

to first of by local impacted a In concerns of and the historically in disproportionately series the communities actions announced EPA to pollution. U.S. addition, respond

both as clients they Our us regulatory leadership positions navigate and priorities. communities uniquely quality air management to support these our and new our

the navigate stewardship. our environmental customers corporate rapidly to with evolving help requests we sector, continue investor and public Beyond regarding to priorities partner them

drive treatment regard. an this and one incredible team. to well-positioned A the in water business as our to and example management value of clients in us water large markets, allow to of growing environmental related and capabilities tailwinds industry, many, Our and capture addressable serve

reasons All and Montrose to it the is lead of are exciting this time privilege an for grateful incredible for group. these

to and highlights I'll XXXX accomplishments. some Next, point

grew considerations. acquisition-related which We Excluding XX%. business, the excluding the which XX% strong operating new with service converted EBITDA XXXX by adjusted adjusted year response acquisitions cash our growth to We of revenue XX% lines maintained emergency flow, XXXX the our compared to growth. discontinued segments. fueled non-recurring of our revenue strong combined that year, EBITDA given excludes in prior of retention the prior XX% XX% is our year, the increased definition. contingent rate revenue payment impact CTEH, over of for approximately customer across

patents with Our environmental filed to continue to for investments and innovation in believe allocate were R&D in continued future. support with us through several and patents we growth four awarded the investments, our on awaiting to focus additional XXXX, long-term and/or strong capital review. We Environmental along innovation well these see opportunities evident position great Solutions will

culture team, to be impressed Montrose caliber attract at retain and continue we corporate and to especially leaders I While continue the to areas in and by the of built wage higher our the level recruitment above. director on positive and I'm market, of of here inflation focus be high senior such turnover broader retention proud at strong in our and XXXX, of was level the talent. the concentration

M&A acquisitions of with XXXX January by almost operating XXXX, one pipeline goal added which remains and have previous of our funded cash our and XXXX six capabilities talent historical Last Our in year, internally strategic pool. were completed and acquiring and entirely We annualized our exceptional to achieved generated million we in environmental strong. our cadence. evolving in of flow $XX all line to millions EBITDA $XX goals

accretive to supports one our agencies, $XX EBITDA to particularly A expectation from million Looking environmental ability growth us deliver two ahead, year, in confidence market public of our the an million to ESG for annualized social commitment XXXX. This per during for as solid $XX a to outperform We our company and leading rating years our less given in continue our receive MSCI, and were stewardship. to acquired long-term pipeline immediately gives stable our than investors. including exceptional rating honored performance and acquisition the

at by at capture very by to Horizon revenue contracts see our for flexible though of Environmental them do proven stellar of in our advice long-term labor with to Intelligence driven positive segment CTEH, is new pleased key their A and business job second their Response adaptive look capability, acquisitions pool, contributions to from and most into in and differentiator and our in their supported technology is industries, segment. of Within this half strategic business were the we'll particular. we a data clients and and be team segment, large industry management the of highly to have leadership market Permitting, Assessment, the The pandemic CTEH converting share. the Next, our XXXX. which response continuity continues

it CTEH As through through continued the surge, supporting and on pandemic, XXXX. revenue our to previous that relates modulates trend two calls which began mentioned QX, to QX which we've a during clients into

compared still XXXX. demand through XXXX to anticipate While rate, elevated to compared their was is run we CTEH and normalize historical will

business XXXX, performance to assessment $XX and million. from rate, this revenue but higher-margin CTEH, tailwinds. segment revenue continued CTEH see of million organic $XXX million than $XXX our their exceed we $XX such, and over which to higher As services ecological XXXX than in to lower expect million their permitting run Within is nice excluding

bolstered Within our and remain one growing America, Vista the largest continued was footprint, market and regulations. measurement segment, quality and in our in upbeat environmental which management We air about analysis analytical and given of the enjoy lab we growth acquisitions this leadership is North ECI. of segment, by

demand our and to service States mitigation example, to related United across continued measurement and the advantages see software Canada. methane and strong For

finally, expected, by shared strong regulatory treatment normal investments year are and anticipated out bio-gas, energy demand our example, more for addressing industry Margins strong. quarter for the our levels not we than within with specifically prior We demand are we business is us. you of outstanding for higher and given Montrose. of is Margins developing below accreting trajectory with renewable driven but could the closer specialized another remained ongoing completion our be marked as our normal our for on before PFAS noted averages, growth, pleased normalization the another in remain to continued panning a which and segment, as business. around environment carbon summary, testing, The in they have environmental fourth created PFAS matures. reuse value remediation but particular. And remains organic services In calls as we the intensive As are seeing as expected. we results negative water

where XXXX, IPO of ended be. ahead back XXXX would July we Going we our in to thought of we

faster scale services Our we and select than revenue grew anticipated faster than we thought. earnings and

catching can As a so capture are tailwinds believe corporate strong next we chapter and the Montrose's We well-positioned profitably reoccurring outperforming work we clients. infrastructure demand, debt, the pipeline, leverage, continue establishing in result, given our the we our organic up inflationary through to and are evolution. driving power of our our during revenue spite on grow solid and pricing headwinds, M&A the mostly rate fixed low with growth,

ever, we more are We optimistic look as XXXX. arguably at than

end to the Before to thanking members the like remain through efforts and rooted progress and it I in results To for listening, you you their for well put turn achieving they've in it forward our around to in hand over team optimism we on of and for grateful work acknowledging Allan clients through our these results. is over thank continue our that, creating our you and hard support world we our I of outstanding XXXX. a year congratulations me milestone continued updating to this XXXX. serving on and stay there, and all Allan, confidence tremendous to through value. out would future times, thank the I and colleagues. our To and by Montrose's With Please uncertain the safe all look as let to you. and your investors, opportunity team Montrose for our

Allan Dicks

Thank you, Vijay.

pleased extremely and fourth-quarter XXXX are our We full-year strong with results.

that XX our as strong through our months the nature mentioned, our past has the Vijay solutions. environmental since the year unique of entry As as the discussed reflects over performance in-demand well IPO,

as we expanding Our year, growth and success our of reflects cross-selling our to exposure which early with with initiatives, which customers, notable our strengthen across revenue gains future steam the geographies, all from growth. key through progress are relationships organic

given we the for million, to a quarter of drove on in Moving related our growth. $XXX.X revenue Full-year year-over-year impressive, quarterly $XXX.X revenue continued CTH particularly to quarters performance XXXX, driver fourth our both business during revenues year-over-year to In is record million. across the for historically XX. one fourth increased which up is Slide quarter the full-year. quarter was XX.X% and of growth services our Total periods strong COVID fourth XX.X% revenues, primary both a XXXX were down to slow. segments weaker of growth and as The was revenue organic revenues record

For our including the growth CTEH full year, response XX%, organic was business.

organic as growth generally year-over-year organic be XX%. focus basis growth CTH, quarterly was can don't on misleading. a Excluding We quarterly comparisons on

organic growth, a full to in XXXX. of full-year results nine CTH our addition XXXX compared months benefited from results XX to In months of

strategic Our also completed was during outperformance by in XXXX. periods acquisitions both our six driven

at second at in from quarter comparisons. discussed to response we've XXXX. service prior calls, we was XXXX the process partially completed certain in of offset end first the This was As outbreak, the discontinued early quarter lines mainly COVID-XX XXXX in the of

XX% Excluding discontinued XXXX. in the would for increased service year have lines, revenues

following Slide adjusted slightly, adjusted XX.X% pandemic expected at normalization $XX.X of mix, The for XX.X%. of due EBITDA lines was adjusted adjusted including provided the infrastructure. EBITDA EBITDA to up lower-margin margins in The grew million margins EBITDA Looking fourth our reversal and in $XX.X to were million performance related investments periods by EBITDA was response and of was revenue. XX.X% pressured Full-year XX corporate CTEH. certain and both COVID-XX and quarter planned services mainly initiatives adjusted margin business to margin on XXXX business the

the and quarterly is current is This how prior costs were the during reemphasize consistent predictable year we for how basis. stronger as impacted performance resources we soft, environmental of hire earlier. [Indiscernible] He specific an to Our of needs and not company. evaluate Vijay your point full-year on in the on made business annual. I'll and full-year portion also public margins year. be the said Montrose existed This annual passes allocate services assessed or predictability with that driven by by manage is the company

margin acquisitions year. to the contributed $XX.X in measurement XXXX largely CTEH response results Horizon largely result in to increased prior Environmental compared in in COVID-XX both the Slide on Intelligence driven Turning segment business, an the above The assessment, from to and fourth which in to services. X.X% result work from investments of million the $XXX.X to year-over-year reuse Partially we from basis XXX our million EBITDA $XXX.X the related costs increase acquisitions attributable the services, by in the permitting increased in finally, COVID-XX growth declined $XXX.X the of segment revenues. segment, discontinued benefited business to our of the million, due and and the margin free and organic remediation Environmental outset increase lower temporarily revenues was to point in in in biogas suspended well MSCI quarters margin second adjusted demand third adjusted pandemic. $XXX.X CTEH, were performed reflecting the XX.X% adjusted sustained In XX% The and full-year acquisition year. higher and response EBITDA CTEH to reuse Adjusted quarter. to full-year lines response performed and of a revenue Adjusted in greater the and $XX.X prior revenue business in a expansion. and the from year. chemistry significant EBITDA in of also margin decline by quarters Adjusted a work of full-year year-over-year provide margin reinstatement increases response the certain million reflect XXXX. elevated impact project. at and million a to the our segment frequent of segment, for related mediation to CTEH full-year segment, EBITDA first this XX. XX.X% been by in prior The XX.X% saw year trend mainly time of full-year have increase the and Vista EBITDA to respectively. respectively, million and of million The that in revenues a segment. In in our grew improved costs and $XX.X in decline pandemic in XXXX. EBITDA mix analysis offset to of for geographic million, demand $XX.X was this revenues contributed growth in our third and service in primarily continues And COVID anticipation revenue border to significant pass fixed

as annual projectory Slide rate Looking of has an discussed at business our XX, last we our million. $XX million quarter, on expected run review believe of CTH to revenue $XX our we business

nature is of revenues to in and the said, CTH includes to revenue produce the When of CTH impact the normalized CTH. during CTH, related they base at our year trend demand COVID-XX we QX to years expect Although revenues and the is at we million the CTH to above each demand of demand in would is sequentially continues That be as widen. business, not refer our the $XX.X as to see heightened COVID-XX transitory the to normalize, services. a for from for and quarter related $XX.X the to in as elevated the remainder remained was revenue result million fell level coming revenue same in reoccur expected which end from expected revenues QX, services continues what excluding revenue

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

operations and from prior of $X.X thrilled at see respectively. year. flow the compared acquisition-related Moving year of contingent in on year million to capital step and of to for last the $X.X a million consideration change payment Slide $XX.X our full increased million million the includes in We Cash $XX.X cash structure XX. generation current were which to XXXX, operating our

operating $XX.X capital in driven was by record payments, from increase earnings an significantly increase of activities to million was partially $X.X working contingent by non-cash an from This cash payments XXXX, full-year the before offset primarily cash and $XX.X a $X.X XXXX Excluding of in consideration acquisition-related in activities compared operating items, million. million increase full-year higher million. of

generation strong nearly into with year. long-term conversion operating into EBITDA expectations conversion the capabilities In a on corporate ongoing communicated the the rate flows a in of for line at operating Our flow generation scalability. These XX% cash technology, reflect and cash previously of investments a excess for XX%. R&D, cash of continued cash flow EBITDA of gas infrastructure to ensure strong flow resulted focus our balancing adjusted with in in our of adjusted

Our December leverage at of impact in which QX X.X we of despite times, XX, XXXX, ratio the contingent to the includes quarter. unchanged earn-out obligations as acquisitions compared the two acquisition-related was fourth completed

was at rate an of interest execute of borrowings swap and this XXXX, into end further ratio to January we on our flexibility objectives. equity us the entered leverage growth as January such gave in Moves transaction, our million XXXX. In the X.X financial fixing October component on Our until year. prior of XXXX interest variable times our $XXX follow-on rate the offering

preferred a given A-X to equity shares XXXX. anytime to flexible has as if view its subject We Series in redeem have value for a at prepaid this preferred we the dynamics. instrument payment maturity to make-whole business not the dates, and favorable stock the our no preferred the potential As reminder, the obligation prior to creation but option, cash, April

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

ability we in drive the to business full-year into XXXX. to our our in XXXX, through on XXXX base confident full growth and in Based Slide strong outlook Moving our business year momentum XX. on are the

adjusted range $XXX full of year $XX the be We in and for in million are million. to range million to XXXX our be EBITDA to outlook million revenue $XX $XXX of to the introducing

Our XXXX outlook double-digit combination plus contribution of the we've on CTH, excluding of based is organic acquisitions the already growth, completed.

million in COVID-XX revenue XXXX to higher first substantially due lower than services, to $XX rate, performance. 'XX, half million some CTH run annual of continuation expect but full-year the million particularly We than exceed its $XXX related its to revenue $XX of

run personnel the four of prior full-year full-year in should company outlook in consolidated, normalized scale. finally, in And currently The - to in compared that key over Analysis long lower to revenues public XX%. mix, around normalize percentage I blocks summary, Permitting, infrastructure cost term. and services were began saw significant XXXX to we business we the remains as environmental at was margins EBITDA segment, growth XX% building XXXX infrastructure are milestone another due adjusted will as and our the support a and adjusted the In levels. EBITDA unchanged matures. margin margins Reuse to differentiated the across XX% our business to Montrose to Lower five-year a investments EBITDA between In containment XX% Measurement has pre anticipated results the lines Remediation provide Montrose. over to corporate relation and which margins acceleration full-year Assessment, expansion over EBITDA and time immature year Response our reversal during period. expected and to some corporate and a low-to-mid costs XXXX run and margins due COVID-XX margins efforts, continued, expectations our for adjusted resilient our segment, run frame. margin remained year, to we our costs, to for of of to While In expect segment, expect adjusted continue

talented us XXXX. accretive immediately our exceptional and have results and investments footing IP the M&A entering members, on in Our transactions, portfolio strong and team put driven our year,

questions. over open appreciate industry. capture today. and share additional on joining and in the Montrose in to solutions our to and in the sincerely increasingly we we Operator, our further ability look We to ready gases, optimistic year, went progress deliver us ahead, as as are gives you regulations, opportunities financial interest come. as updating address greenhouse are We which create on fragmented and to the renewables, rules forward growth you for in lines confidence our [Indiscernible] us our our market to see well the to integrated objectives thank to the your to years and all We we evolving in value

Operator

[Operator Please you. proceed. Our Thank with first & Jim Needham question is Company. Instructions] from Ricchiuti

Jim Ricchiuti

morning. Hi, Good thanks.

Vijay Manthripragada

Hey, Jim.

Jim Ricchiuti

question a I of the was talk wanted talk growth. terms There I just business little you are, in wondering you're infrastructure of the to that you about where -- investments really impacting what you but perhaps the the inflationary is that bit with the to follow-up like the you I'm -- how to able extent to making are support are relates overall some impacting presumably every the could wonder to in pricing rise you? if I the pressures, compensation are to your that initiatives offset are -- costs through else. wondering, even clients? revised business pressures, of these the

Vijay Manthripragada

Hey Vijay. Allan and I Jim, not take this jump that then is in. certainly do

pricing, in pressures On fair confidence increases that we price a of degree pass have to inflationary Jim. on the will the able be terms of we

ability like on. get -- testing costs up, great. business, Our as so similar bio-gas the the treatment environment compensation but our like we're certainly multiple compensation as cost They seeing linear not direct, are business, of relationships on so businesses. of goes our water clearly customers with or passed a or we're It's In seeing as aspects are the the those quite side same seeing our businesses and well. other advisory in it's

about environment. not this in our of long-term we're the So -- we're worried inflationary expansion context margin

around are question necessitated being your those are part public. The that of by first of partially function a investments

for a company. costs being So public scale a comparison year-on-year we've seen in material in up

a that our reporting, thought is on. [Indiscernible] grown we on audit to -- pace has bigger So than compliance, and like status, and than quicker we at that fact filings, fees, gotten lose the better caused growth we've goes margin list additional ESG faster the us

part the of near quicker stabilize Then clip other billion Some Jim. will we got we than at much more thought, very revenue that's it. and is $X.X so part that's certainly necessary as the in that future, a voluntary in of

some We affairs measures corporate is spend safety and investments as our very technology, watch took of the additional we to we so place. outperformance way we some capabilities, bolster of closely, that marketing, we as in infrastructure, revenues the in business development, of percentage that I advantage those last would are place that characterize put and putting had very, year compliance fact regulatory dramatic a of

to to a of get some to have forward getting place in Does infrastructure dollars look we that that billion make As revenue, sense? there. of we

Jim Ricchiuti

And you. have question. early my elaborate talking this. Thank may about benefits the you The we're does. can alluded cross-selling, It of follow-up some seeing, on Allan anything area? been this in may successful early that it This making who terms to progress -- you're in

Vijay Manthripragada

Yeah. We're and you're progress, nothing great else, if Jim, making very consistent.

think we will first question asked of place we right? quarter-on-quarter and the end force of what at at XXXX, have of the of You've beginning that we year. sales that here promised put is in full-year the QX our repeatedly a I comparison, last Given tools

underway in now sales have a in some you testing efforts have and segments particular. to between points. for that talk advisory I we'll the with we while, into incredible our remediation of segments we reuse when think been May, So have amount more our seen data collaboration discrete -- an marketing our But and the

on side. business As the treatment on a small and advisory winning illustrative both example, side we're the

are to an able case service May. studies dollars additive both also we'll terms but position as with unique business, when we a cross-sell and is a creates As that compelling we in to that activity business in elaborate our opportunities. We're that in seeing testing of more and part and market, you type one parcel of lot the of speak

Jim Ricchiuti

Got it.

Okay. Look -- forward to

Vijay Manthripragada

where is also with organic have a see function cross-selling the you that we necessarily one growth the is As seeing we effort Jim, of didn't it. partially the point infrastructure you're that there surge at make other do would you very can I IPO to that in, talked about

off. are investments the paying Now

Jim Ricchiuti

you. Thank

Operator

is Blair. question next Our from William Please proceed. Mulrooney Tim with

Unidentified Analyst

(ph.) here, Hey for Thanks hoping Tim. our for guys well. Flynn you're taking doing this is Sam questions

Vijay Manthripragada

Hey, how're you?

Unidentified Analyst

on in Ukraine do differently a bio-gas thinking business and the Maybe going are were we'll Europe? how you event long-term there start result crisis the of good. changed as about current think has sanctions more areas that here. about domestic the Doing your here, But resulting you to any Maybe some questions opportunity? broadly what's

Vijay Manthripragada

and the for No. at going as assume the obvious certainly everyone hope on Europe is, situation we're in results that what's reasons. all dismayed really we

little Now any impacted monetary U.S. European point, we regulatory we we of have in fiscal policy But way. haven't any their both terms policy. very to if would shift that any be really the their that as Montrose exposure at or really in impacts of all, if where of and or their this change as seen policy materially, governments

pace, do going for we prominent gas is In I the excluding to in Ukraine business gas think demand to more anything, trends that in transitions particular, play so CTEH of we XX% that there's that a That's long-term the and space, from momentum on phase energy terms we a that. the one there role the next. trends the are the negative and it of will driving than bio terms in more posted, be continued Montrose organic think to continuing the carbon fundamental if that additive that to margin think growth, of other And Russia. as world gas. includes And intensity

no what's Montrose we're been, Europe, note. bullish So Eastern in happening of really by impact ever to we've we're as as saddened but really

Unidentified Analyst

that for leak pivoting how Maybe maybe XXXX hear. are about talk XXXX? expectations heading great what detection bit and here. Okay, and performed great. business your overall Can That's you your a to into that business

Vijay Manthripragada

-- Yeah

Unidentified Analyst

in expect or you new from that the EPA from proposal anything Would this business nature?

Vijay Manthripragada

promoted the capability. the prominent broadly spectacular And those doing growth methane a characterize detection and folks is than it greenhouse kind roles, is have into team organic our measurement would that into but our to and That rate. growing regulatory -- of job. gas measurement I see more small we with on have macro of more organically. more reason Montrose future, mean, favorable. business environments taken have the historical Montrose, just is as faster no been Several The at still to I prominent double-digits that Yes. foreseeable growing see national relative And oversight. roles only the more global change across

in advantages moving market Our our relative and more direction. market the are is prominent

acceleration been and organic. continued we guidance, We And are as should bullish as we've Allan's conviction our apparent. in as ever of be

greenhouse the above will think well detection it gas that. averages If you X% and of our go piece part back leak to and of just X%, historical to of continue we that

Unidentified Analyst

PFAS. this have any us lingering We've air [Indiscernible] And to Have emission to articles guys piece? any really brought portfolio? One you that just how air for address in do concern issue do the clients this a your the few up particles. in PFAS then, you to see around quite about capabilities and relate opportunities seen to more more in growth you

Vijay Manthripragada

Clients Yes, come to it. yes. have us about and

We in test some capabilities folks involved we're of advanced that helping the and solve have it. intimately for space, in most it,

PFAS PFAS developed involved North to happens incinerating with air On next state, was which as he associated lab to in side some first in organically and of networks one we our the in environments to Regan's issues Latin our right there. home well, the of back Carolina, Administrator happen former largest have be aerosolization also

we're well aware of and how to And so, mitigate some of what happened that.

edge of that. on the Some us our leading capabilities put of

it's implicit that's analysis numbers side. in the and inherent So -- our measurement on already

Unidentified Analyst

full next the of guys. answers, Best on I Excellent. luck the year. appreciate

Vijay Manthripragada

Thank you.

Allan Dicks

Thank you.

Operator

a [Operator As reminder, Instructions].

from Obin Andrew Our is Please with America. proceed. of question Bank next

Emily Shu

Good Hey. Andrew is Shu on This guys. Obin. for Emily morning

Vijay Manthripragada

Hey, Emily.

Allan Dicks

Emily. Hey,

Emily Shu

How outperformed the CTH rate? CTH run COVID the did curious in first if -related of Thanks. prior above cases the business business quarter, given high with your about the it still in million you I'm how then Omicron COVID $XXX Hey. much be for in that should Omicron were forecast? running are December. And January, thinking

Vijay Manthripragada

toxicology. I of have is response Emily, broad talk why kind more, with across a specifics. jumped broad-based holistically don't and Allan business. CTEH then They just in capabilities

talked their us advantages. about is that some The really them we you, the of long were for performed. some through with proud you as workforce, expected course we I went reasons they modeling, work they've you We pretty when Emily, the team preamble and and is how in flexible about talk -- response I software incredible incredible. reason a year. their your last The anticipated of through think COVID heard give of gives their all and deceleration

million anticipated $XX where about in were north of predicted actually were way. So if revenue. of quarter-on-quarter XX%, of you They think all they QX in a but XXXX, and QX down about

to is that so they breath. fatigue and Some performing need amount a to team of their due were significant with catch that of their well dealing

that some demand continues. think we As XXXX, about of

preparedness mitigation it it's just about is, much put about Omicron and in being place. As broader measures as

for back $XX because the we rate running our they're towards this $XX go million half forth million would which north forecast that year. we work, the we first them expect this of about run year, of of of that as you response is So put to if to year-in, from the year-out, weighted XX% COVID think

elevated, our $XXX margin really to half of continue some that Does implicit is and your Emily? side. going side million through So of be we continue the year, first this well it's revenue that and certainly the on which in very to think is do they both last They perform modulating. but question, an year, continue to guidance, over answer did

Emily Shu

that the then it then the gives me. Bay. growth on high question within does. double-digit out the be this helpful. just sort will follow-up performance super rate for single-digit outlook, to that versus you confidence the historical years. five of It's for sustainable XXXX Yeah, organic is what And organic And growth three Thanks, the next

Vijay Manthripragada

Yes, not to three Emily. the we're guidance next giving five-years, for

the to I broader treatment we of for testing we're really year, are on reasons of conviction really going on a message think has to our for couple this macro our and PFAS opportunity. kind the we side, that well. have But performed business stick [Indiscernible]

project or lot others dependent in future a seeing us, not our regulations numbers It's are in already with We sector today. conversations unlike private demand future on some of alluded you've to that we're cycles.

intensity greenhouse demand earlier side measurement really comments, nice the bio-gas of were and energy last back really talked three on this business renewable we the some reason demand are segments. And the year part the are I gas They're we year we maintained for levers seeing that are there. have some On -- we're already at performing seeing side, specific really three on the Those on about so well conviction XX% us. there. those nice of

Emily Shu

on. great. Okay, luck, Good it guys. pass I'll

Vijay Manthripragada

Thanks, Emily.

Operator

is with proceed. Dilts question Stifel. from Please Noelle next Our

Noelle Dilts

[Indiscernible]

Vijay Manthripragada

Noelle. Hey,

Noelle Dilts

about gave of how effect margin on [Indiscernible] on normalized the give from EBITDA level? you it think color the for contribution Emily a dilutive us as me. revenue. -- CTEH we That's appreciate to COVID color I just little Hey. should I margin could we work bit was the more the more move a you Thanks. hoping

Vijay Manthripragada

[Indiscernible] take will I

Allan Dicks

Yes.

they see some the to a continued As we is similar likely expand typical the a elevated run XXXX, is we versus at normal which going be margins back the into look demand elevated normalized margins half, to and demand range. are first and then more to anticipate a we rate, we'll XXXX, work, [Indiscernible] mid-twenties level that as earnings and lot COVID of of going to expect return to post so

[Indiscernible]. at back-off lower revenue from see higher but margin back the You'll the them percentages in office

Noelle Dilts

the EBITDA More specifically, dollar XXXX this -- us you're you specific? could or not that CTH in from contribution give getting

Vijay Manthripragada

way in -- a They helps me Their margin if and you're maybe let new know Noelle, trying modulate. it, to Allan business EBITDA. of ran well, do terms sounds in this because to QX, high-teens it

you If his of XX% which in Allan macro about that being our range. comments on profile impact that talked about to think the profile margin segment in XX%

that were Hopefully did bit tragedy it's the a a model of incredibly They you because to in it a allows well, how segment, swung You bit profile. so of little effectively. riches. it more margin but overall little see they can that big

question go issue to over We're back, I margins articulating two-fold. again. having a forward Noelle, to this ability going suspect and this accrete is in really as up on think and we're that's just our we stepping bullish over really I is come the

margins in surged revenue little a areas specific where are Our lumpy.

is talked of also our part remediation reuse The it is just part business. that we of CTEH, about. which So

We on bio-gas and side. rapid PFAS are seeing acceleration the treatment

Allan, low-to-mid I'm to see in seeing that that the We're margin disproportionate of phase XX%. that wrong, of in but That for are growth correct are is those As what you can accrete still XX% from business normal business. XXs. growing, also if the would be parts is temporary the below me margins -- ways business, dilutive which

if on side, mid any our will into CTEH So as corporate adjusted normalizes, that matures sense. as EBITDA nicely the twenties accrete radiation really makes the reuse excluding that

this twenties to So of get you'll volatility percentage But bullish ebb we being look business bigger. flow able that's get really different nomenclature of we And using and we're come parts see five keep margin. on as that over mid mix. the operating business as some revenue why to to as EBITDA forward, there we a three down corporate years, saddened then will as

Noelle Dilts

Okay. Thank you.

Operator

over our question-and-answer session. the would I reached to back closing end conference the Vijay comments. like have We of for to turn

Vijay Manthripragada

all and us update. you with the the as a and we care. catching joining provide of your Take thanks to up out XXXX to safe forward we team really months We appreciate Montrose there of today of all stay time. members you Thank for QX and listening. you all of couple Thanks look in to

Operator

does Thank you. conference. today's This conclude

at time You participation. may disconnect you lines and your your this thank for

Montrose Environmental (MEG) 1 Mar 222021 Q4 Earnings call transcript