Montrose Environmental Group, Inc.

Second quarter revenue was $186.7 million, down $47.9 million from the prior year quarter. Consolidated adjusted EBITDA was $31.9 million, or 17.1% of revenue, versus $39.6 million and 16.9% a year ago. Consulting and Treatment revenue was $125.6 million, down from $171.7 million, with segment adjusted EBITDA margin at 22.2% versus 21.9%; Measurement and Analysis revenue was $61.1 million versus $62.8 million, with margin at 26.2% versus 29.1%. For full year 2026, Onterris raised/lowered? updated revenue guidance to $740 million-$790 million and EBITDA guidance to $117 million-$120 million. Q3 revenue guidance is $190 million-$210 million with EBITDA margin of 17% to 18% at the midpoint. Management expects second-half operating cash flow of $70 million-$80 million and year-end leverage of approximately 2.5x.

Vijay Manthripragada emphasized that the business should be viewed on an annual basis because emergency response activity can make quarters noisy. He said the core business remains on a high-single-digit growth trajectory longer term, with confidence anchored in predictable testing and known Consulting and Treatment projects. He also said the company is focusing on cost discipline, cross-selling, and disciplined bolt-on acquisitions, while the board’s strategic review is underway with no predetermined outcome.

Allan Dicks framed the outlook update through revenue and earnings bridges, saying lower pass-through revenue and lower emergency response revenue were the main drivers of the revised guidance. He noted that lower pass-through revenue reduces EBITDA by about $4.5 million, lower higher-margin emergency response revenue by about $10 million, and that other items net to a $5.5 million benefit from cost optimization and operating efficiency. He said first-half operating cash flow was negative $5.5 million versus positive $27.4 million last year, largely because of lower earnings and $27.7 million of incentive compensation payments, but expects $70 million-$80 million in second-half operating cash flow, with June 30 leverage at 3.2x and liquidity of $160.8 million.

Analysts focused on why core revenue guidance fell, especially the drop in pass-through revenue and emergency response activity. Management said pass-through is not zero-margin, typically carrying a small markup, and that the lower level reflected project mix, fewer emergency response jobs, and more recovery work being performed with less subcontracting. Management also said the emergency response slowdown is cyclical rather than competitive, and that temporary regulatory waivers are pressuring air testing timing but not changing the underlying work. On the strategic review and rights plan, management declined specifics but said an 8-K would disclose the details and that the board is reviewing all alternatives to maximize value.