NYSE:MEG
Montrose Environmental Group, Inc.
A specialized industrial contractor delivering environmental cleanup services with a diverse portfolio of soil, water, and air remediation solutions.
Key Metrics
Investment Thesis
Bull Case
The massive 52% revenue expansion in 2025 combined with a near-break-even net income suggests the company is finally reaching an inflection point toward sustainable profitability. MEG's diverse portfolio of remediation technologies provides recurring revenue opportunities as industrial clients continuously face mandatory environmental compliance requirements. Strong operating cash flow of $107.5M demonstrates underlying business quality and the potential to service existing debt obligations without immediate dilution.
Bear Case
Investors should avoid this stock given the persistent pattern of net losses over four consecutive years, which casts doubt on management's ability to control costs effectively. The company has accumulated a significant retained earnings deficit of -$273.5M, signaling that historical growth has been funded primarily through debt rather than organic internal cash generation. With long-term debt exceeding $277M and recent massive financing outflows, the balance sheet appears fragile in a high-interest rate environment.
About Montrose Environmental Group, Inc.
Montrose Environmental Group (MEG) is a leading provider of industrial environmental remediation services, specializing in soil, groundwater, and air treatment solutions. The company serves markets across North America and Europe, addressing challenges from manufacturing facilities, refineries, and power plants through its proprietary technology platforms. MEG generates revenue primarily by contracting to remediate hazardous materials at client sites using advanced extraction and destruction technologies.
Analysis
Management Discussion
While revenue grew significantly from $544.4M in 2022 to $830.5M in 2025, the company has struggled with profitability, reporting a net profit of -$843,000 for the latest year after years of larger losses. The improvement in net income trend toward breakeven is offset by heavy cash outflows from financing activities totaling nearly $1B, suggesting significant refinancing or debt restructuring events occurred during the period. Operating expenses remain high relative to gross profit, indicating intense competition or rising project costs that are compressing margins despite top-line growth.
Industry Overview
The industrial environmental services industry is driven by stringent government regulations requiring the cleanup of hazardous waste from legacy sites and active manufacturing operations. Companies in this sector face cyclicality based on capital spending cycles at their client base but offer stable long-term demand as regulatory standards tighten globally. Market leaders differentiate themselves through proprietary technologies that allow for cost-effective, on-site remediation rather than expensive off-site disposal methods.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $544.4M | $624.2M | $696.4M | $830.5M |
| Cost of Revenue | $351.9M | $383.9M | $418.2M | $496.2M |
| Gross Profit | $192.5M | $240.3M | $278.2M | $334.3M |
| Operating Expenses | $220.5M | $268.7M | $314.9M | $322.6M |
| Operating Income | $-28.0M | $-28.4M | $-36.7M | $11.7M |
| G&A | $176.3M | $222.9M | $261.6M | $270.8M |
| Stock-Based Comp | $43.3M | $47.3M | $64.7M | $42.7M |
| D&A | $47.5M | $45.8M | $52.8M | $50.9M |
| Depreciation | $7.2M | $10.3M | $12.0M | $12.3M |
| Amortization | $36.1M | $30.1M | $34.9M | $29.9M |
| Other OpEx | $44.3M | $45.9M | $53.3M | $51.8M |
| Non-Operating Income | $-1.6M | $-3.4M | $-17.6M | $-504.0K |
| Pre-Tax Income | $-29.6M | $-31.8M | $-54.3M | $11.2M |
| Income Tax | $2.2M | $-980.0K | $8.0M | $12.1M |
| Continuing Ops | $-31.8M | $-30.9M | $-62.3M | $-843.0K |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $-31.8M | $-30.9M | $-62.3M | $-843.0K |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $-31.8M | $-30.9M | $-62.3M | $-843.0K |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $247.9M | $200.9M | $238.0M | $240.4M |
| Cash & Equivalents | — | $23.2M | $12.9M | $11.2M |
| Accounts Receivable | $94.7M | $112.4M | $158.9M | $155.4M |
| Prepaid Expenses | $10.3M | $13.7M | $14.1M | $15.0M |
| Other Current Assets | $142.9M | $51.7M | $52.1M | $58.8M |
| Long-Term Assets | $544.0M | $615.9M | $752.4M | $740.9M |
| PP&E (Net) | $36.0M | $56.8M | $63.8M | $63.9M |
| Goodwill | $323.9M | $364.4M | $467.8M | $466.8M |
| Operating Leases | $26.0M | $32.3M | $39.8M | $36.6M |
| Other LT Assets | $158.0M | $162.3M | $181.0M | $173.7M |
| Total Assets | $791.9M | $816.8M | $990.4M | $981.3M |
| Current Liabilities | $111.4M | $126.3M | $158.7M | $168.0M |
| Accounts Payable | $25.4M | $31.1M | $33.4M | $34.8M |
| Current Debt | $12.0M | $14.2M | $17.9M | $11.2M |
| Current Leases | $7.9M | $10.0M | $11.3M | $10.7M |
| Deferred Revenue | $18.5M | $8.1M | $9.3M | $15.0M |
| Other Current Liab | $32.9M | $46.9M | $70.5M | $77.9M |
| Long-Term Liabilities | $214.4M | $216.3M | $292.5M | $362.1M |
| Long-Term Debt | $152.5M | $149.0M | $204.8M | $277.1M |
| LT Operating Leases | $19.4M | $25.0M | $30.9M | $28.2M |
| Other LT Liab | $42.4M | $42.3M | $56.8M | $56.8M |
| Total Liabilities | $325.8M | $342.6M | $451.2M | $530.1M |
| Shareholders' Equity | $466.1M | $474.2M | $539.2M | $451.2M |
| Paid-In Capital | $492.7M | $531.8M | $721.1M | $727.9M |
| Retained Earnings | $-179.5M | $-210.4M | $-272.7M | $-273.5M |
| AOCI | $8.0K | $-223.0K | $-2.1M | $-3.2M |
| Total L&E | $791.9M | $816.8M | $990.4M | $981.3M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $-31.8M | $-30.9M | $-62.3M | $-843.0K |
| Non-Cash Adjustments | $80.7M | $93.0M | $52.0M | $81.2M |
| Working Capital Changes | $-28.3M | $-6.1M | $32.6M | $27.2M |
| Cash from Operations | $20.6M | $56.0M | $22.2M | $107.5M |
| Capital Expenditures | $10.0M | $29.6M | $21.3M | $16.3M |
| Cash from Investing | $-38.7M | $-101.6M | $-138.0M | $-15.8M |
| Dividends Paid | $16.4M | $16.4M | $11.1M | $4.2M |
| Cash from Financing | $-38.8M | $-20.1M | $106.0M | $-93.1M |
| FX Effect | $-111.0K | $-876.0K | $-497.0K | $-224.0K |
| Net Change in Cash | $-56.8M | $-65.7M | $-9.8M | $-1.5M |
| Beginning Cash | $146.7M | $89.8M | $23.2M | $12.9M |
| Ending Cash | $89.8M | $23.2M | $12.9M | $11.2M |
Frequently Asked Questions
How does Montrose Environmental Group, Inc. make money?
The company's financials reflect revenue streams from its core remediation segments including Soil Remediation, Groundwater Remediation, Air Remediation, and Oil & Gas services. Significant capital expenditures indicate active expansion in high-value projects requiring heavy machinery and proprietary extraction technologies. The substantial goodwill suggests a history of successful acquisitions that have diversified the client base across various industrial verticals.
What are the main risks for MEG?
Persistent net losses over the past several years raise concerns about the sustainability of current operations and the ability to return capital to shareholders. High levels of long-term debt and significant accrued expenses create leverage that could be strained by project delays or cost overruns common in environmental services. The substantial retained earnings deficit indicates a historical reliance on external financing to fund growth, which increases vulnerability to interest rate hikes. Exposure to regulatory changes and fluctuating commodity prices for fuels and materials used in remediation poses additional operational risks.
What is MEG's competitive advantage?
MEG leverages a strong portfolio of proprietary technologies that allow for on-site treatment rather than off-site disposal, reducing costs and environmental impact. The company benefits from a diverse project pipeline spread across multiple geographic regions, mitigating reliance on any single market or client sector. Strong operating cash flow generation despite recent net losses demonstrates the ability to manage complex large-scale remediation projects efficiently.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.