Montrose Environmental Group NYSE: ONT, which rebranded as Onterris in April, reported lower third-quarter revenue but higher profit and a record adjusted EBITDA margin as it faced a difficult comparison with a large environmental recovery project in 2025.
Revenue fell 9.7% to $203 million from $224.9 million a year earlier. Excluding the prior-year event, revenue increased 13%, Chief Financial Officer Allan Dicks said on the company’s November 5 earnings call.
Consolidated adjusted EBITDA rose to $35.9 million from $33.7 million, while the adjusted EBITDA margin expanded to 17.7% from 15%. Net income attributable to common stockholders increased to $9 million, or $0.24 per diluted share, from $8.4 million, or $0.21 per share.
President and CEO Vijay Manthripragada attributed the margin improvement to operating leverage, project mix and cost discipline. “These are structural improvements in how we manage and execute the business rather than benefits in a single quarter,” he said.
Segment Results and Cash Flow
Consulting and Treatment revenue declined to $142 million from $161.9 million, reflecting the absence of the prior-year environmental event. The segment’s adjusted EBITDA rose to $30.8 million from $29.8 million, and its margin increased to 21.7% from 18.4%.
Excluding the prior-year event and environmental emergency response revenue in both periods, Consulting and Treatment revenue grew by $15.3 million, supported by core consulting and water treatment, Dicks said.
Measurement and Analysis revenue slipped to $61.1 million from $63 million, primarily because of lower field services revenue. Its adjusted EBITDA fell to $16 million from $17.3 million, with the margin declining to 26.1% from 27.5%.
Third-quarter free cash flow was $41.5 million, bringing the year-to-date total to $24.9 million. For the first nine months, operating cash flow was $35.4 million, down from $55.5 million a year earlier. Dicks said the decline primarily reflected $16 million of higher bonus payments in the third quarter tied to 2025 performance.
Leverage fell to 2.9 times at quarter-end from 3.2 times in the second quarter. Onterris expects year-end leverage of approximately 2.5 times, including its recent acquisitions.
Outlook Relies on Water Treatment Growth
Onterris reiterated its full-year 2026 guidance. Dicks said the midpoint of its outlook implies an adjusted EBITDA margin of approximately 15.5%, about 150 basis points above 2025. The company also expects to convert at least 60% of adjusted EBITDA into operating cash flow for the year, above its long-term target of 50%.
Through 2030, management expects approximately 15% compound annual revenue growth and 25% adjusted EBITDA growth. Those projections assume average organic revenue growth of roughly 10%, above the company’s previously stated expectation of 7% to 9%.
Manthripragada said the organic growth expectation reflects opportunities in water treatment, including industrial wastewater and municipal drinking water, as well as work involving PFAS. He cautioned that the 10% figure is a long-term trend, not formal guidance for 2027.
Dicks said the company expects continued margin expansion over the next three to five years, potentially reaching the high teens to low 20% range, though not necessarily in a straight line.
Acquisitions and Strategic Review
Onterris completed three acquisitions for a combined investment of approximately $14 million: an air-monitoring business in the U.S. mountain states during the quarter, followed by EcOz Environmental Consultants in Australia and Permian Basin Environmental Lab in Texas after quarter-end.
Manthripragada said the small bolt-on deals would have a minimal effect on 2026 results but could contribute to the company’s plans for 2027 through 2030. He described the acquisition pipeline as robust and said Onterris would remain within its publicly stated leverage commitments.
The board-led strategic review announced in August remains ongoing. Manthripragada said the company has engaged with strategic and financial parties but has not set a timetable. He cautioned that there is no assurance the review will result in a transaction or another outcome.
About Montrose Environmental Group (NYSE:ONT)
Montrose Environmental Group, Inc is an environmental services company that helps industrial, commercial, government and other organizations address environmental compliance, sustainability and risk-management needs. Its services span the full project life cycle, from environmental assessment and permitting to monitoring, remediation and ongoing compliance support.
The company provides air quality and emissions testing, environmental laboratory services, consulting, engineering, water and waste management, environmental health and safety support, and remediation services.
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