Montrose Environmental Group, Inc.

If you would like to withdraw your question, please press star one again. For operator assistance throughout the call, please press star zero. And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Adrienne Griffin, Senior Vice President, Investor Relations and Treasury, to begin the conference. Adrienne, over to you.

Thank you, operator. Welcome to our third quarter 2025 earnings call. Joining me today are Vijay Manpreet Bregada, 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 Investors 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 included in our annual report on Form 10-K for the fiscal year ended December 31st, 2024, as supplemented by our quarterly reports on Form 10-Q, which identify the principal risks and uncertainties that could affect any forward-looking statements and 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, adjusted net income per share, and free cash flow. 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 GAAP measure. With that, I would now like to turn the call over to Vijay, beginning on slide four.

Thank you, Adrienne, and welcome to everyone joining us today. I will provide an update on the strength of our third quarter and year-to-date results, discuss our increased 2025 guidance and the reasons for our more optimistic 2026 outlook, and speak generally about the third 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, 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 want to take a moment to express my sincere appreciation for our approximately 3,500 colleagues around the world. Their exceptional contributions, commitment to exemplary client service, and passion for environmental stewardship and innovation are the cornerstones of Montrose's success. Together, we pursue our mission of For Planet and For Progress. For Planet and For Progress, this means Montrose aims to simultaneously address our universally shared desire for clean water, clean air, and clean soil while creating jobs and increasing shareholder value. We are partnering primarily with our industrial clients across end markets to help them operate more efficiently and reduce their impact on their environment. This is why our revenue and earnings are hitting record levels despite all the political rhetoric. Whether it is working with our energy producing clients to reduce air emissions and costs, whether it is working with our waste industry clients to address water contamination concerns and risks, or whether it is working with technology and semiconductor companies on permitting or water access concerns, our financial results speak to how environmental stewardship can work in concert with development and value creation. This is why our record 2025 continues. From a financial perspective, we achieved our third consecutive quarter of record performance, including free cash flow generation that exceeded expectations. Broad-based client demand for our services is reflected in the 26% revenue growth and 19% consolidated adjusted EBITDA growth in Q3 year over year. As we look at the more meaningful and longer-term financial result trends of year-to-date 2025 results, revenue has increased 26% with very strong double-digit organic revenue growth, and adjusted EBITDA has increased even faster than revenue at 30%, reflecting continued margin accretion of an additional 1% of revenue year over year. This margin accretion is due to both strong organic growth and operating leverage in our consulting, testing and water treatment businesses in particular. Operating and free cash flow have increased meaningfully by 65 million and 77 million year over year, which has allowed us to deliver the balance sheet faster than expected and has increased our flexibility to further invest in our people and our business. In addition, Given our strategic acquisition pause at the start of 2025, which we initiated to clearly demonstrate the underlying power of our business and business model, and we believe that power and strength is apparent from these results, for the second consecutive quarter and year-to-date periods, we reported positive net income and positive gap EPS, which Alan will expand upon in his prepared remarks. I'm very proud of my team for delivering these exceptional results while maintaining their focus on our mission and our clients. As we look forward to the rest of 2025 and to 2026, our optimism remains, and we are thrilled that our financial results continue to clearly show why we are and remain upbeat about our business's prospects. Regarding updates to our guidance, due to our strong year-to-date performance, and based on consistent client feedback about the importance of our services to their operations, we are raising 2025 guidance for the third consecutive quarter. We now expect 2025 revenue to be in the range of 810 to 830 million, and 2025 consolidated adjusted EBITDA to be in the range of 112 to 118 million, which represents an approximately 18% revenue increase and 20% full-year adjusted EBITDA increase at the midpoint over 2024. Given recent questions about the topic, we want to remind you that our exposure to the U.S. federal government remains very modest, well less than approximately 5% of revenue, and that we have not been significantly impacted by the recent U.S. government shutdown. Notably, we observe that state and local governments have and continue to, step in to address gaps and uncertainties left by the U.S. federal government, creating additional opportunities for growth that we did not anticipate at the start of this year. We continuously monitor these developments to strategically position ourselves to capitalize on these new opportunities. We do acknowledge that external factors such as economic volatility, policy fluctuations, and evolving regulatory frameworks are influencing our industry. However, Montrose's unique business model and our competitive positioning has allowed us to capture tailwinds from these external factors. And our positioning has also allowed us to stay largely insulated from the broader volatility. I will now highlight a few of the tailwinds benefiting us this year. As a reminder, we have repeatedly heard from our clients that one, their long-term outlook has not changed. that two, they see increasing domestic industrial activity as a net positive, and that three, they remain committed to complying with state and international regulations that impact their ability to drive their financial results. All acknowledge challenges from the current volatility in U.S. federal regulations, but by and large, we've only seen a few of our approximately 6,000 clients make any changes to their operating policies or decisions. This is why our business remains resilient. For example, and regarding greenhouse gases, which are among the most politicized air contaminants, changes to U.S. federal policy seem to have been more than offset by the impact of state regulations, including states in which we have many employees and clients and which are across the political spectrum. For example, in Texas, in Colorado, and in California. In addition, Market forces, such as the recent EU methane regulations, expand the global market for emissions monitoring and compliance, as these requirements affect global exporters, including US LNG and oil producers, who are among our key clients. Montrose's historical investments in advanced monitoring technologies enable us to work with our energy clients to provide better, faster, and more cost-effective results. Coupled with our clients continuing to take practical long-term views, demand for our services continues abase. And because these regulations are multi-year in scope, with phase deadlines and increasing stringency through 2030, demand is often longer term and more predictable. These state regulations and market forces are a large part of why our measurement and analysis segments organic revenue growth and margins are at record levels in 2025. As another example, the clarification of the US EPA's perspectives on PFAS regulations in Q2 2025 and the agency's continued focus on water quality has resulted in a steady increase in the number of opportunities for our water treatment business. Not only does our pipeline of water treatment opportunities continue to expand meaningfully, but our year-on-year organic growth for this service is expected to remain elevated and accretive to our 2025, 2026, and long-term organic growth outlook. As a third example, increased mining activity in our Canadian and Australian markets has resulted in attractive and new growth opportunities for Montrose in both of those geographies. The recent Rare Earths Partnership across governments adds more momentum to an already attractive industrial end market for Montrose. The environmental consulting, permitting, testing, and water treatment needs for our mining sector clients are likely to create nice tailwinds for our business over the foreseeable future. As a fourth example, increased industrial activity, aging infrastructure, and more severe weather-related events continue to drive outsized demand for our environmental emergency response business in the United States. What is critical to convey is that though the response-related earnings are meaningful and unpredictable, they are an increasingly smaller part of the whole and, and this is critical, they are very additive to our long-term organic growth and cross-selling algorithm. As a simple analogy that hopefully sheds light into the strategic and financial value of having a response business as part of our service portfolio. Because of our focus on being an environmental science peer play, our response business is like the emergency room in our environmental hospital, so to speak. Once a patient comes into the ER of a traditional hospital, they are likely to need testing services and inpatient services. This is similar to our dynamic at Montrose, where our environmental testing and our environmental consulting and treatment services often follow our environmental emergency responses. What we are increasingly finding as the team works more closely together is that post-response, there are substantial downstream and often recurring long-term opportunities for Montrose. Said otherwise, our environmental emergency response is not just episodic, it has also provided structurally recurring opportunities for us and supported long-term organic growth opportunities. As a specific example, earlier this year, we responded to an accidental environmental release for one of our energy clients, and our involvement in this response helped us secure long-term remediation and testing related to the event, which not only benefited third quarter results, but will also likely result in multi-year opportunities for Montrose. We expect our environmental advisory and air monitoring services will continue with this client for many years to come. We hope these examples help provide more context around why demand for our services continues to increase and remains visible and predictable for our teams. 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, research and development, and technology. We regularly review our service lines and operations to ensure achievement of our internal return hurdles and research optimization. Through this internal evaluation and given changes to U.S. policy and the resultant impact on the U.S. market for renewable energy, We determined that it is prudent to exit our renewable service line within our remediation and reuse segment. We expect to have this materially wound down by the end of this year, and the impact of this decision has already been embedded in our results and outlook for 2025. Second, we will emphasize scalable profitability by expanding our market position through continued investments in sales and marketing. These investments are already embedded in our current outlook. Given most of our organic growth has come from increasing our share of wallet with our existing customers, given we remain a small fraction of our clients' overall spend on environmental solutions, and given we have very strong customer retention, in 2025, we continue investing in building a best-in-class commercial team. This team is selling technical services to clients, is also enhancing our brand visibility, and has started increasing our focus on sectors that enable us to address broader trends faced by our clients and their peers as a group. We have had the fortune of adding some incredible talent to our technical and commercial teams in 2025, which is why we have so much conviction in our ability to continue driving market leading organic growth and the resultant margin accretion into the foreseeable future. Third, We will continue to evaluate strategic and accretive acquisitions and retain the flexibility to opportunistically repurchase shares to maximize returns. Our acquisition strategy isn't just about skill. It's about capability and geographic reach. We evaluate each opportunity for strategic fit and for the potential to drive outsized financial returns. Optimizing our capital structure and managing leverage, along with our continued focus on increasing operating and free cash flow generation, remain core to our acquisition and to our operating decision models. Due to the highly fragmented nature of our industry and client feedback on the value of scale and capability and reach, and given our strong performance with cash generation in 2025, we expect to restart acquisitions sometime in 2026. Long-term, we will continue delivering compelling organic growth of 7% to 9% annually, with EBITDA growth expected to outpace revenue growth. Coupled with acquisitions which will be additive to these growth rates, we remain confident in our ability to create outsized returns for our shareholders. These frameworks and industry dynamics contributed to our outstanding year-to-date 2025 results, our increased 2025 guidance. and the 2026 outlook we are sharing today. In 2026, we expect to achieve at least $125 million in EBITDA. We also anticipate further improvement in EBITDA margin in 2026 compared to 2025. Our resilient business model, execution in 2025, and exceptional team give us the confidence to provide an early outlook for another excellent year in 2026. We will continue to navigate the complexities of this evolving market landscape. But regardless of the complexities, we are committed to surpassing our goals, as we have been doing, and to generating significant value for all of our shareholders. With that, I will hand it over to Alan. Thank you.

Thanks, Vijay. In 2025, we have sharpened our focus on driving best practices and on delivering for our clients, shareholders, and employees, with our record third quarter and year-to-date financial performance highlighting the results of some of these efforts. Our third quarter revenue grew by 25.9% compared to the same quarter last year, reaching $224.9 million. Year-to-date revenues increased by 25.6% versus the previous year. totaling $637.3 million. The primary drivers of revenue growth in both periods were organic growth across all three segments and modest contributions from acquisitions completed in the previous year, with additional environmental emergency response revenues also adding to year-to-date revenue growth. Robust revenue growth and enhanced operating performance fueled the third quarter consolidated adjusted EBITDA increase of nearly 19% to 33.7 million or 15% of revenue. Similarly, year-to-date consolidated adjusted EBITDA increased 35% to 92.3 million or 14.5% of revenue, a 100 basis point improvement over the same period last year. This year, we are investing in marketing to boost our brand equity, rewarding employees for their contributions, refining our go-to-market strategy, and assessing future organizational needs. These efforts are shaping our future success, and we look forward to discussing more with you as we progress. In the third quarter of 2025, we reported positive GAAP net income of 8.4 million, or 21 cents of GAAP earnings per diluted share attributable to common stockholders, compared to a net loss of 10.6 million, for a $0.39 net loss per diluted share attributable to common stockholders in the prior year period. This notable $18.9 million increase in net income and $0.60 increase in GAAP earnings per share was attributable to strong revenue growth, margin expansion, and a $10.6 million fair value gain related to the Series A2 redemption, partially offset by higher interest and tax expenses. and an increase in weighted average diluted common shares outstanding. This marks our second consecutive quarter and the first year-to-date period of reporting positive GAAP operating income, net income, and GAAP EPS. Continued growth and margin expansion driven by brand and go-to-market investments, as well as continued cross-selling success, will help make these key performance metrics more sustainable. Year-to-date, Net income was $7.4 million or $0.08 in gap earnings per share compared to a net loss of $34.1 million or $1.30 net loss per diluted share in the same period last year. Year-over-year $1.38 improvement in earnings per share primarily resulted from higher net income and dividend relief following the Series A2 redemption, partially offset by an increase in weighted average diluted common shares outstanding. I remind our audience that on July 1st, 2025, we redeemed the final $62.6 million of the Series A preferred stock in cash, funded with cash on hand and borrowings under our credit facility, achieving our balance sheet simplification goal six months ahead of schedule. Year-to-date adjusted EPS were $45 million and $1.03 respectively, reflecting an improvement over the prior year period of 38.6 million and 80 cents. Please note that our adjusted net income per diluted share attributable to common stockholders is calculated using adjusted net income attributable to stockholders divided by fully diluted shares. We believe this net income methodology is currently the most helpful net income per share metric for Montrose and common equity investors. I will now discuss our performance by segment. focusing my comments on the third quarter. In our assessment, permitting, and response segment, third quarter revenue grew 75% to $91.1 million from $52 million in the same period last year, driven by increases in nonresponse consulting and advisory services, which included the benefit of remediation consulting services cross-sold following the large environmental incident response in the second quarter of this year. The assessment permitting and response segments adjusted EBITDA was 20.4 million or 22.4% of revenue, a 90 basis point improvement over the previous year due to favorable revenue mix. Turning to our measurement and analysis segment, revenue for the quarter increased 7.5% to 63 million, driven by organic growth across lab and field services, and modest contributions from an acquisition in 2024. Segment-adjusted EBITDA rose to 17.3 million, or 27.5% of revenue, representing a 460 basis point margin improvement over the prior year period. In 2025, measurement and analysis segment margins have significantly outperformed the prior year, as utilization of efficiency gains and our teams enhanced operating performance. We expect segment margins to remain elevated in the next few years, likely greater than 20%. In our remediation and reuse segment, third quarter revenue increased to 70.8 million from 68.1 million in the same quarter last year. This segment suggested EBITDA declined to 9.4 million and adjusted EBITDA margin fell by 380 basis points to 13.3%, primarily driven by losses incurred in the wind down of our renewables business. Our water treatment business continues to gain momentum, and we are pleased with the organic growth and margin progress in that service line. Moving to our cash flow and capital structure. We achieved 55.5 million of operating cash flow in the first nine months of 2025. a 65.3 million improvement compared to the prior year period. Year-to-date operating cash flow, which was driven by higher cash earnings and improvements in working capital, represented a 60.2% conversion of consolidated adjusted EBITDA, significantly exceeding a greater than 50% target. Free cash flow, defined as cash flow from operations, less cash paid for purchases of property and equipment, and capitalized software development expenditures and excluding the series A2 preferred dividends was 38.8 million, an increase of 77.4 million over the prior year. Of note, 38.8 million of free cash flow generation equates to 42% conversion of consolidated adjusted EBITDA. We are also pleased with the strength of our balance sheet at quarter end. reporting a leverage ratio of 2.7 times and substantial available liquidity of 198.5 million. At the beginning of this year, we established expectations to simplify our balance sheet, report year-end leverage below three times, focus on organic growth, and increase operating cash flow generation. With three quarters behind us and our increased full-year 2025 guidance, we are confidently on track to surpass these goals. Thank you all for joining us today and for your continued interest in Montrose. We look forward to the opportunities ahead and we'll update you on our progress next quarter. Operator, we are ready to open the lines to questions.

If you wish to ask a question, please press star followed by one on your telephone and wait for your name to be announced. That is star one if you wish to ask a question. And your first question comes from the line of Tim Maroney from William Blair. Your line is open.

BJ Allen, good morning.

Hey, Tim. How are you? Hey, Tim.

Yeah, doing well. Thanks. So I wanted to ask to start off on that APNR business. You know, it showed really strong growth this quarter, much higher than we were expecting. Allen, you touched on it in the prepared remarks, but can you go into a little more detail about what drove that growth? How much of that is structural versus perhaps some larger one time sales maybe related to that disaster business? Is there any pull forward from the fourth quarter as well? Because in order to hit the midpoint of your guide for the the full year, it looks like we need to assume that maybe that business decelerates on a sequential basis. So just want to have a broader conversation about APNR specifically. Thanks.

Hey, Tim, why don't I start, and Alan can certainly jump in. So a lot of the outperformance is tied to the excellent cross-selling following the emergency response that we alluded to earlier this year. So as you think about the strategic pieces which is what you're asking about, but even testing and remediation, all of them are benefiting from those efforts. And so to answer your question specifically, it is both structural and some of it is one time. And we certainly expect that from those cross-selling benefits, as we alluded to in Alan's comments and mine, there will be some really attractive downstream testing and remediation business that will continue for a while. And then as it relates to the second part of your question, and your executive.

OK, that's really helpful. Thanks for connecting the dots there, Vijay, for between what's happening and the guidance that all makes sense to me now. I want to switch gears really quickly and just ask about your comments on your water treatment business. It sounds I mean, the tone sounds pretty positive, maybe even a little more positive this quarter than what I've heard in the past. Maybe I'm making that up in my head, or maybe that was by design, but it sounds like you're, you know, incrementally positive on that business, at least to me. I wonder, you know, what's driving that? You know, I recently, you know, we saw that the EPA Tim Stenzel- reaffirmed the Biden era designation for PFOA and PFOS as hazardous substances under the CERCLA super fund we weren't really sure which way that was going to go. Tim Stenzel- I have to think that's good for your business long term so curious how you're thinking about that and if that had is related to. Tim Stenzel- The positivity that you're seeing in that water treatment business or if it was other factors, thank you.

TAB, Mark McIntyre, Thanks Tim I am. So the short answer is yes, but let me let me just step back and talk a little bit about our water treatment business. It is seeing really healthy organic growth and The reason we talk about water treatment now is that this is kind of a team that has intellectual property and technology that is applicable across multiple contaminants, not just PFAS. And so, yes, the clarity around the PFAS regulations are contributing to our growing pipeline. They are contributing to capabilities, we're seeing kind of opportunities more broadly where PFAS is a contaminant of concern, but not the only one. And I think that's an important distinction there. We're seeing opportunities across new industries, for example, like pharma and semiconductors that are popping up or the or the landfill leachate and the waste industry where our technology is applicable across a broader swath of contaminants, including PFAS. And so it's really a water technology business. And as that technology Yes, our optimism related to the future is much stronger, but those are the reasons why this is not just a PFAS play, but that is certainly a driver over this.

Thanks, Vijay. Congrats on a nice quarter. Thanks, Tim.

Your next question comes from Jim Rikushi from Needham & Company. Your line is open.

Hi. Thank you. Good morning. I wanted to just touch on... Hello, everyone. I wanted to touch on the announcement that you talked about on the renewables, renewable service side of the business. And this may have been in some of the information you provided. I apologize if it was. But the revenues associated with renewable services and maybe, Alan, if you can, can you help us with the impact on margins from the wind down of this part of the business?

Jim, why don't I explain why we're doing it and then Alan can give you kind of color on the potentials. As we look at the current administration's policies around biogas in particular and some of the uncertainties related to it, we've seen a pullback from some of those clients on kind of the demand cycle and the opportunity for us, given our specific capabilities, to scale that business. So in this current environment, it does not make sense for us internally, given some of the other opportunities we're seeing that we talked about. So that's the reason for the wind down. If I exclude the wind down impact, which is in all the numbers, it's included in all of our guidance, the segment margins would be up year to date nicely. given the current administration's policy.

Yeah, and on the revenue side, Jim, we've got a couple of projects we're winding down, and so we're not generating any new projects. So it's de minimis revenue this year, a very significant percentage decrease year over year. And Vijay is right, if you had to exclude that, margins in that segment would be up. We do expect to fully be out of that business by the end of the year.

Okay.

On the decision to look at restarting M&A at some point in 2026, DJ, maybe you can touch a little bit on whether Yeah, your acquisition priorities might be different than what you pursued in the past. And just given the current dynamics of the market, maybe you could give us a little color. I know it's still perhaps a ways out, but just talk to us about how your M&A strategy might be evolving.

Sure, Jim. Just from a, in terms of our capacity, right, the, strategic thesis around our desire to continue consolidating this market is unchanged. As we think about the incredible success Alan and So the short answer is I do expect to certainly restart acquisitions very soon, certainly in 2026. And the nature of those transactions, you know, we're kind of evaluating size and our ability to digest larger assets. We've had a lot of success, as you know, with the recent acquisitions of size like CTEH or Matrix. And so those types of assets continue to be very attractive for us. We've seen some really nice opportunities internationally as we continue to scale in geographies like Canada and Australia. Again, staying true to our core business and business capabilities, but just expanding kind of our reach at the request of our clients. And we believe that there's going to be continued margin accretion opportunities larger transactions. And so our shift there is a little different, Jim. As we think about the large assets trading in the private sector, those assets are trading in the 17 to 20 times multiple EBITDA multiple, and then the smaller assets continue to trade in kind of that mid to high single digits. And so that balance obviously weighs pretty heavily as we think about future opportunities for us to expand. It is still a massive addressable market. Even with our current trajectory and rapid growth, we're still a small piece of it. And so it is a core part of the thesis. And I certainly am excited to get that going again in the near future. Does that answer your question, Jim?

Yeah, it does. It's helpful, Vijay. Thank you. And congrats, by the way, on the quarter.

Thanks, Jim.

Your next question comes from the line of Tim Moore from Clear Street. Your line is open.

Thanks, and nice execution on organic sales growth and free cash flow conversion. It's quite the improved company compared to before 2024, so really great operational execution and strategy. But just switching gears to, you know, I want to start maybe with remediation and reuse. You know, how should we think about the potential for margin expansion cadence there on the step up to maybe, you know, a higher team to just even down margin? You know, that business might be a little subscale now, but I was just kind of curious. I mean, is there a trigger point, like, 80 million revenue quarterly, or do you think that would be more of a priority to kind of do both on acquisitions to get the utilization and the scale up there for more margin expansion?

Yeah, let me take that. It's less about M&A adding to that segment to get margins up. It's fundamentally the water treatment business that is going to drive most of that margin expansion. treatment technology business, which included the renewables business, has run kind of low teams on a combined basis. When you pull those two businesses apart, that water treatment business has been running kind of high teams in biogas or renewables in the single digits. So what we're seeing is as we wind down renewables, you're going to get that margin deteriorative business out of the way. And we're seeing nice accretion on the water treatment side that will be in the 20% margin range on its own. And so as that business continues to expand as a percentage of the segment's revenues, you're going to see a natural lift in the overall margins. There is margin accretion in the rest of that segment, but obviously not to the extent.

That's a great call. No, thanks for breaking that out. I think that really helps investors and explains the catalyst. It'll just be self-help. So Vijay's prepared remarks mentioned mining in Canada and Australia. We've seen a lot of the rare earths and EU emission rules come out for LNG exports. Are there any other areas you can talk to about besides the non-PFOS water treatment and semiconductors? I mean, you had that really good announcement earlier. late August for Western Canada for the restoration and water restoration and decommissioned facilities. Are you seeing more of that kind of pop up? And anything else you can talk about maybe that you haven't mentioned that's kind of heating up?

Yeah, Tim, I mean, we're seeing, as you think about kind of our strategic focus on industrial climate, second, right, and obviously all of those industries are now tailwinds for us, but even in Canada with Prime Minister Carney's Canada First approach and the material investments in infrastructure and industrial production, energy production, as you think about Australia and the administration's focus there on mining and energy production, and as we think obviously about the United States, all of those are structural tailwinds for our business, and the reason is That's our client base that is picking up activity. And so as we think about the pharmaceutical industry, for example, and the GLP-1 business that is obviously booming for all reasons you guys know, the water implications of that are substantive, and so we're seeing nationally. We're seeing really nice pickups there. As we think about the mining industry, independent of the recent rare earths announcement, we saw some really nice pickup and activity, some of which we announced earlier. Obviously, our leadership there and the needs of that industry as deals between the US and Australia, for example, pick up. There is no one specific spot that is disproportionately driving it. We are seeing some elevated activity in the waste industry, both from an air emissions monitoring, from a testing perspective, and also from a water treatment perspective that we did not anticipate. And obviously, the energy industry, given the increased production demands across our geographies, is a big contributor to us this in 2025. So I'm pretty excited as I kind of look forward and look at where we strategically placed our bets. Some of that is kind of coming our way and is creating tailwinds, and I expect that to continue.

That's terrific, Vijay. I just want to speak in one last small question here. On cross-selling for more share wallet and, you know, to create better awareness of, you know, you being the rare fully integrated one-stop shop solutions provider, you know, I know there was a survey, you know, not long ago, independent survey, A lot of customers don't even know that you can handle multiple services. Have you been investing in a dedicated team to kind of get the word out there about your national reach with local expertise to really fulfill all their needs of services for new customers?

We have, Tim. We have. And let me just make this abundantly clear. Those investments are in all the numbers we're giving you. There's nothing incremental. It's in the guidance. And it's already embedded. But yes, we have been investing in our marketing, which we think is a powerful way. And we're excited about some of the brand efforts that are underway to get the word out so that our clients continue to understand all the things we can do. And we have also been investing in bringing in some incredible talent on the commercial side to really help us think about sectors and some of our key logos as we think about making sure that they understand that this is the portfolio of solutions we provide are meaningful and broad and not specific necessarily to the one, two, three services they use us for in specific geographies. That's been a major focus in 25 and will continue to be a major focus in 26. That talent's already in-house, which is partially why we have conviction as to what next year is going to look like.

Great. That's it for my questions. Thanks.

Thanks. As a reminder, if you wish to ask a question, please press star followed by one on your telephone and wait for your name to be announced. That is star one to ask a question. And your next question comes from the line of Andrew Obin from Bank of America. Your line is open.

Hi, this is Devon Leonard on for Andrew Obin. Hey, Devon. So with the great showing in AP&R and the outperformance somewhat tied to the cross-selling from earlier emergency responses, what level of cross-selling or recurring revenue is typically associated with these emergency response projects? thing you could call out from historic?

It really varies, Devin. And look, I would just point out that, yes, that segment had exceptional performance. But as we look kind of year to date, our testing segment has also had an incredible year. So the momentum of the business beyond APNR really is broad-based. And Alan already alluded to the outperformance on the water treatment side as well. But specific to APNR and specific to the typical cross-selling rhythm, It really depends on the nature of the incident. And so as a simple example, with the train derailment in Ohio and the results and challenges associated with that, a lot of the work that our team did, the future cross-selling, was really tied to air monitoring and toxicology services, for example. As we think about the energy-related release in the mountain states this time, a lot of that is tied to remediation testing for examples there is no simple mechanism or algorithm the market in real time absolutely and then switching gears a little bit just could you you talked about the eu methane regulations earlier in the prepared remarks can you go into some more details about the potential market opportunity related to that yeah as we think about the large u.s manufacturers producers of energy the european markets are a big part of what they focus on right and as a result they are subject not only to u.s And so what we are seeing is that for the large players and the large exporters, as activity picks up for them, demand for our services continues to increase. So the reason I brought that up, Devin, was because we received a lot of questions saying with the current administration's de-emphasis and desire to pull back on regulations related to greenhouse gases, are we seeing headwinds? And what we're seeing is, in fact, we're not. We're seeing activity continue apace and we're As we look forward, that's a very creative business for us, and we have not seen a pullback there as many anticipated at the start of this year. Does that make sense?

Absolutely. Thank you so much.

Thanks, Devin.

There are no further questions at this time, so I'd like to hand back to management for closing comments.

Thank you all, and thank you to the Montrose team. We look forward to very much for your interest and have a great day.

That does conclude our conference for today. Thank you for participating. You may now all disconnect.