Executive Summary

Record Q3 revenue of $178.7M (+6.4% y/y) and record Consolidated Adjusted EBITDA of $28.3M (15.8% margin, +190 bps y/y); diluted Adjusted EPS rose to $0.41 vs $0.31 y/y .
GAAP net loss widened to $10.6M, driven primarily by higher interest expense; GAAP LPS remained $0.39, flat y/y due to lower preferred dividends and higher share count .
Full-year 2024 guidance reaffirmed: revenue $690–$740M and Consolidated Adjusted EBITDA $95–$100M; Q4 expected to deliver +10–15% y/y revenue growth and +350–400 bps y/y margin expansion .
Near-term capital allocation pivot: redeem remaining Series A-2 preferred and delever (no equity issuance), temporarily deemphasizing M&A; operating cash flow conversion improved to ~40% of Adjusted EBITDA in Q3 with further improvement expected in Q4 .
Regulatory tailwinds and federal exposure strengthen demand (PFAS-related lab +~30% and consulting +~75% in 2024; selected for $249M USACE environmental services contract), supporting 2025 momentum .

What Went Well and What Went Wrong

What Went Well

Record revenue ($178.7M) and record Consolidated Adjusted EBITDA ($28.3M) with consolidated margin expansion to 15.8%; CEO: “Record quarterly revenues and Consolidated Adjusted EBITDA… as well as the 190 basis points of margin improvement” .
Measurement & Analysis delivered strong organic growth and operating leverage: revenue +16.1% to $58.6M; segment Adjusted EBITDA +29.2% to $13.4M, margin 22.8% (+230 bps y/y) .
Matrix Canada operating turnaround: achieved mid-teens EBITDA margin in Q3 (tripled y/y vs pre-acquisition), with solid organic growth despite pricing actions .

What Went Wrong

GAAP net loss increased to $10.6M due to higher interest expense despite improved operating loss; LPS flat at $0.39 owing to lower preferred dividends and higher share count .
AP&R segment revenue declined y/y ($52.0M vs $57.0M) with Adjusted EBITDA down ($11.2M vs $14.9M), reflecting a $12.8M reduction in high-margin environmental emergency response revenue .
Operating cash flow YTD turned negative (-$9.7M) vs prior-year positive $41.5M, largely due to higher receivables and contract assets amid invoicing delays (Matrix) and slower payments on a large U.S. government-funded project (collections normalizing) .

Financial Results

Metric	Q1 2024	Q2 2024	Q3 2024
Revenue ($USD Millions)	$155.3	$173.3	$178.7
Diluted Adjusted EPS ($)	$0.16	$0.20	$0.41
Consolidated Adjusted EBITDA ($USD Millions)	$16.9	$23.3	$28.3
Adjusted EBITDA Margin (%)	10.9%	13.5%	15.8%
GAAP LPS ($)	N/A	$0.39	$0.39

Segment	Q3 2023	Q3 2024
AP&R Revenue ($USD Millions)	$57.009	$52.019
AP&R Segment Adjusted EBITDA ($USD Millions)	$14.878	$11.188
Measurement & Analysis Revenue ($USD Millions)	$50.468	$58.583
M&A Segment Adjusted EBITDA ($USD Millions)	$10.352	$13.370
Remediation & Reuse Revenue ($USD Millions)	$60.460	$68.085
R&R Segment Adjusted EBITDA ($USD Millions)	$7.446	$11.655
Corporate & Other Adjusted EBITDA ($USD Millions)	$(9.373)	$(7.901)
Total Revenue ($USD Millions)	$167.937	$178.687
Total Consolidated Adjusted EBITDA ($USD Millions)	$23.303	$28.312

KPI	Q2 2024	Q3 2024
Liquidity ($USD Millions)	$188.3	$139.8
Cash & Equivalents ($USD Millions)	$16.9	$13.0
Revolver Availability ($USD Millions)	$171.4	$126.7
Leverage Ratio (x)	2.4x	2.6x
Operating Cash Flow (YTD, $USD Millions)	$(21.1)	$(9.7)
Operating Cash Flow Conversion (% of Adj EBITDA)	N/A	~40%

Note on estimates: We attempted to retrieve S&P Global consensus estimates for Q3 (revenue, EPS, EBITDA), but the data was unavailable due to API rate limits; therefore, beat/miss vs consensus cannot be assessed at this time.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2024	$690–$740M	$690–$740M	Maintained
Consolidated Adjusted EBITDA	FY 2024	$95–$100M	$95–$100M	Maintained
Environmental Emergency Response Revenue	FY 2024	$50–$70M	$50–$70M	Maintained
Revenue Growth (y/y)	Q4 2024	N/A	+10–15%	New Detail
Adjusted EBITDA Margin Change (y/y)	Q4 2024	N/A	+350–400 bps	New Detail

Management also reiterated a long-term target to convert 50%+ of Consolidated Adjusted EBITDA into operating cash flow and near-term prioritization of redeeming the Series A-2 preferred without issuing equity, with a temporary deemphasis on acquisitions .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
PFAS and regulatory tailwinds	EPA finalized MCLs/CERCLA; testing ramps; treatment to follow; TAM ~$200B; strong cross-segment impact	PFAS-related lab +~30% y/y; consulting +~75% y/y; treatment technology revenue increasing sequentially since April	Strengthening
Matrix Canada margins	Seasonal Q1 pressure; full-year double-digit margin expected	Achieved mid-teens margins in Q3; margin ~3x y/y vs pre-acquisition	Improving
Emergency response revenue	Tough comp vs 2023 derailment; lower ER revenue in H1	AP&R down y/y due to $12.8M ER decline; Q4 ER likely toward upper end of $50–$70M range (hurricane impact)	Variable/Normalizing
Capital allocation	Redeemed $60M preferred; upsized credit facility; April equity raise	Redeem remaining preferred; delever; no equity issuance; deemphasize M&A near term	Balance sheet simplification
Macro/regulatory posture	Loper Bright & election outcome not expected to alter outlook	Resilient across administrations; Chevron/Loper effects increased advisory demand	Resilient
Federal sector exposure	—	Selected for $249M USACE contract, validating integrated model; pipeline of awards ahead	Expanding

Management Commentary

“Record quarterly revenues and Consolidated Adjusted EBITDA… as well as the 190 basis points of margin improvement” – Vijay Manthripragada, CEO .
“We do not intend to issue equity as a source of funds for the preferred redemption… we will prioritize redemption of the preferred equity and subsequent deleveraging… temporarily deemphasizing acquisitions” .
“Operating cash flow conversion to 40% of consolidated adjusted EBITDA in our third quarter. We expect operating cash flow to increase materially in the fourth quarter” .
“PFAS-related revenue in our laboratories is expected to increase approximately 30% in 2024… consulting services… ~75% in 2024… treatment technology revenue has increased each quarter since April” .
“We are reaffirming our full year 2024 guidance ranges… revenues of $690M to $740M and consolidated adjusted EBITDA of $95M to $100M… Q4 revenue +10% to +15% y/y; margin +350 to +400 bps” .

Q&A Highlights

Political cycle resilience: Management reiterated growth through prior Trump administration and across geographies; limited exposure to federal swings; consulting/treatment tend to outperform when federal enforcement is deemphasized .
Preferred redemption & M&A cadence: Plan to take out next $60M by April, remaining ~$62M shortly after, using cash/credit; near-term pause on acquisitions while maintaining pipeline; no equity issuance to redeem preferred .
Origins & Spirit integration: Both performing well with strong cross-selling; additive to permitting/testing footprint and margins .
USACE contract: Validates integrated strategy; milestones to come; broader federal opportunity set strong .
Q4 drivers: Organic growth across most lines; ER likely toward high end of range; treatment delays easing; supports maintained guidance .
Matrix execution: Q3 mid-teens margin; margin ~3x y/y vs acquisition; pricing, operational excellence, integration savings on plan; organic growth solid .

Estimates Context

S&P Global consensus estimates for Q3 revenue, EPS, and EBITDA were not retrievable at the time of analysis due to API rate limits; as a result, we cannot provide beat/miss analysis versus Wall Street consensus for Q3 2024. We attempted multiple queries but were unable to obtain values.

Key Takeaways for Investors

Quality of earnings improving: consolidated Adjusted EBITDA margin expanded to 15.8% (+190 bps y/y) on organic growth and acquisition synergies; Adjusted EPS accelerated to $0.41, with segment margin gains in Measurement & Analysis and Remediation & Reuse .
Near-term catalyst: balance sheet simplification via preferred redemption (no equity issuance) and deleveraging should improve equity profile and reduce dividend drag; expect staged takeout by and shortly after April .
Cash flow inflection: Q3 operating cash flow conversion improved to ~40% with further improvement expected in Q4 as Matrix invoicing delays normalize and large U.S. government payments catch up .
PFAS secular tailwinds: cross-segment PFAS exposure supports 2025 growth (labs ~+30%, consulting ~+75% in 2024) with sequential improvement in treatment technology revenue post-April rules .
Federal growth optionality: $249M USACE award positions MEG for multi-year federal remediation/quality work; expanding exposure adds demand visibility and diversification .
Emergency response normalization: ER weighed on AP&R y/y in Q3, but Q4 likely toward upper end of $50–$70M range; variability persists, yet core organic growth and mix shift support margins .
FY 2024 trajectory intact: guidance reaffirmed; Q4 expected stronger y/y revenue and margin; supports a constructive medium-term thesis anchored in regulatory complexity, cross-selling, and disciplined capital allocation .

Additional notes: We searched for the specific “8-K 2.02 earnings press release for Q3 2024” but only an 8-K (Investor Presentation) was listed; the comprehensive Q3 earnings press release was used as the primary source for results and reconciliations –.

Montrose Environmental Group, Inc. (MEG)·Q3 2024 Earnings Summary