Montrose Environmental Group, Inc.

everyone to the Montrose Environmental 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Adrienne Griffin, Senior Vice President of Investor Relations, please go ahead.

Thank you, Operator. Welcome to our second quarter 2025 earnings call. Joining me today are Vijay Mandrew-Pragada, our President and Chief Executive Officer, and Alan Dix, our Chief Financial Officer. During our prepared remarks today, we will refer to our earnings presentation, which is available on the investor section of our website. Our earnings release is also available on the website. Moving to slide two, I would like to remind everyone that today's call includes forward-looking statements subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially due to known and unknown risks and uncertainties that should be considered when evaluating our operating performance and financial outlook. We refer you to our recent SEC filings including our annual report on Form 10-K for the fiscal year ended December 31, 2024, which identified the principal risks and uncertainties that could affect any forward-looking statements in our future performance. We assume no obligation to update any forward-looking statements. On today's call, we will discuss or provide certain non-GAAP financial measures, such as consolidated adjusted EBITDA, adjusted net income, and adjusted net income per share. We provide these non-GAAP results for informational purposes, and they should not be considered in isolation from the most directly comparable GAAP measures. Please see the appendix to the earnings presentation or our earnings release for a discussion of why we believe these non-GAAP measures are useful to investors, certain limitations of using these measures, And a reconciliation to their most directly comparable gap measure. And a reconciliation to their most directly comparable gap measure. With that, I would now like to turn the call over to Vijay, beginning on slide 4.

Thank you, Adrienne, and welcome to everyone joining us today. I will provide an update on the strength of our second quarter and first half results, discuss our outlook and increased guidance, and speak generally about the second quarter presentation shared on our website. Alan will provide the financial highlights, and following our prepared remarks, we will host a question and answer session. As we have noted each quarter, I would like to emphasize that our business is best assessed on an annual basis, given that demand for environmental science-based solutions doesn't follow consistent quarterly patterns. This is how we manage our business and how we recommend viewing our performance. I would like to start by expressing my gratitude to our 3,500 colleagues around the world. They get all the credit for these results. Montrose's ongoing outperformance and successes, including the stellar results we will discuss today, reflects the team's collective efforts and their commitment to our mission for planet and for progress. we remain fully committed to delivering best in class service for all of our clients on every project. We have delivered on everything we said we would do from driving organic growth, increasing margins, enhancing cashflow, simplifying the balance sheet and strengthening governance. And we are also having a record 2025. Once again, Our results prove that our unique integrated business model with a diversified client base and durable recurring revenue and our focus on environmental science and patented technology enables us to thrive through economic and political cycles. We continue to demonstrate that we can protect our environment while simultaneously driving economic value for our clients and long-term value for our shareholders. Turning to our financial results, we achieved another quarter of record performance. Broad-based client demand for our services is reflected in the 35% revenue growth and 70% consolidated adjusted EBITDA growth year over year. Our EBITDA growth was due to both revenue growth and a 340 basis point improvement in margins. In the second quarter, we recorded $234.5 million in revenue, driven by an increase in strong organic growth across all three segments, environmental emergency response revenue, and contributions from acquisitions. During the second quarter, we responded to an environmental incident for a large energy client that increased Q2 response revenue by $35 million. Our long-standing relationship with this client was instrumental in our selection as the response advisor. Importantly, our involvement in the response also helped us secure the air monitoring, testing, and long-term remediation associated with the event, which started in the third quarter. Second quarter adjusted EBITDA was $39.6 million, or a 16.9% margin, driven by higher revenue and better operating performance across all three of our segments. Additionally, I want to highlight that we reported positive net income and positive GAAP EPS in the second quarter. Our cash flow generation is strong and also ahead of plan, and our cash outlook remains strong for the year. Alan will elaborate on each of these shortly. To put these results into context, it is our best performing quarter by virtually any financial or operating metric used to assess the business, and it marks the third straight quarter of record results. These results further demonstrate the resilience inherent in the services we provide and the effectiveness of our organic growth initiatives focused on client retention and increased share of wallets. Transitioning to an update on our strategic priorities, in 2025, we are driving strong organic growth, generating solid cash flow, and simplifying our balance sheet, ensuring that this year represents far more than just an acquisition pause. In the first half of 2025, we achieved strong organic growth, and for the full year, we expect to be at or above the high end of our long-term target range of 7% to 9%. Our focus on cash flow generation has resulted in a $48.5 million increase in operating cash flow over the first half of 2024, and we expect to continue generating significant cash flow, including free cash flow, in the second half of the year. On July 1st, we completed our balance sheet simplification by fully redeeming the remaining preferred shares and bringing leverage below three times pro forma for this redemption. We funded the redemption consistent with our commitment to use only cash flow and incremental borrowings. We achieved this goal six months ahead of schedule. In line with these outstanding results, we are raising guidance for the second consecutive quarter. 2025 revenue is now expected to surpass 2024 by 17%, with 2025 full-year adjusted EBITDA projected to grow 19% over the previous year. This increased guidance indicates year-over-year margin expansion aligning with our goal of driving scalable profitability. We also reaffirm our long-term organic revenue growth expectations of 7% to 9% annually. This outlook is supported by ongoing client demand for our unique portfolio of environmental science-based solutions. Managing environmental risks remains important for sustained long-term profitability for our clients. And these risks cut across industries, borders, and beliefs which explains why resilience has become a cornerstone of corporate strategy. Shifting to our client and geographic diversification, we continue to see strong demand for our services across geographies, and 80% of our 2024 revenue generated by clients in the US, which are mostly private sector companies across industries. These clients favor long-term planning, seek to mitigate the impact of political swings, and aim to comply with the complex patchwork of state and local regulations. At the same time, we are seeing increased regulatory influence from local and state governments in the United States. In fact, just last week, we began responding to inquiries for our perspective on recent news regarding the U.S. EPA's proposed repeal of the greenhouse gas endangerment finding. Our conclusion is that though there will be a fair amount of regulatory uncertainty in the near term, the impact on Montrose will be minimal. It will be minimal because first, most of our work is for clients who operate in states that actively regulate greenhouse gases, and second, A lot of our work is for clients who transact globally and are therefore subject to various international protocols like Europe's methane monitoring requirements. Regardless of U.S. federal changes, local, state, and international requirements, as well as institutional commitments and expectations, will continue driving corporate focus on greenhouse gas identification, measurement, and mitigation. For all these reasons, Our clients are not indicating any shift in their operating or compliance posture, and therefore, we have not seen and do not expect much impact on our business. In aggregate, greenhouse gas measurement and mitigation remains a growing service for us. Importantly, given Montrose's broad and growing environmental capabilities, greenhouse gases are a small part of our environmental work with industrial and government clients. we remain very upbeat about our current and future business prospects. Before I hand the call over to Alan, I want to reaffirm the framework that underpins our ability to create long-term shareholder value. First, we will continue allocating capital to the highest return opportunities, including investing in organic growth and our portfolio of differentiated research and development, patents and technology. We will also continue to evaluate strategic and accretive acquisitions and retain the flexibility to opportunistically repurchase shares to maximize returns. Optimizing our capital structure and managing leverage remain core to our strategy. Second, we will emphasize scalable profitability by expanding our market position through continued investments in sales and marketing, optimizing our operating structure, and achieving operating leverage, ultimately driving margin expansion. Third, as an integrator of environmental consulting, testing, and treatment solutions with unique technologies, we will continue delivering compelling organic growth of 7% to 9% annually and EBITDA growth faster than revenue growth. And fourth, we will continue increasing operating and free cash flow generation, This framework contributed to our outstanding first half 2025 results and will support us through the remainder of 2025 and beyond. With that, I will hand it over to Alan. Thank you.