Breaking Down Montrose Environmental Group, Inc. (MEG) Financial Health: Key Insights for Investors

Breaking Down Montrose Environmental Group, Inc. (MEG) Financial Health: Key Insights for Investors

US | Industrials | Waste Management | NYSE

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Understanding Montrose Environmental Group, Inc. (MEG) Revenue Streams

Revenue Analysis

In 2023, the company reported total revenue of $304.1 million, representing a 14.2% year-over-year increase from 2022's revenue of $266.1 million.

Revenue Segment 2023 Revenue Percentage of Total Revenue
Environmental Services $186.5 million 61.3%
Remediation Services $87.3 million 28.7%
Technical Services $30.3 million 10%

Key revenue growth drivers in 2023 included:

  • Organic growth in environmental consulting services
  • Expansion of remediation project contracts
  • Increased demand for technical environmental solutions

Geographic revenue breakdown for 2023 showed:

  • United States: $242.3 million (79.7% of total revenue)
  • Canada: $38.6 million (12.7% of total revenue)
  • International Markets: $23.2 million (7.6% of total revenue)

The company's revenue backlog as of December 31, 2023, was $456.7 million, indicating strong future revenue potential.




A Deep Dive into Montrose Environmental Group, Inc. (MEG) Profitability

Profitability Metrics Analysis

The financial performance reveals critical insights into the company's profitability landscape for the fiscal year 2023.

Profitability Metric 2023 Value 2022 Value
Gross Profit Margin 18.4% 16.7%
Operating Profit Margin -3.2% -5.6%
Net Profit Margin -4.7% -7.3%

Key profitability observations include:

  • Revenue for 2023: $628.3 million
  • Operating Income: -$20.1 million
  • Net Income: -$29.5 million
Efficiency Metrics 2023 Performance
Operating Expense Ratio 21.6%
Return on Assets (ROA) -2.9%
Return on Equity (ROE) -5.4%



Debt vs. Equity: How Montrose Environmental Group, Inc. (MEG) Finances Its Growth

Debt vs. Equity Structure Analysis

As of Q4 2023, Montrose Environmental Group, Inc. reported the following debt and equity financial metrics:

Debt Metric Amount ($)
Total Long-Term Debt $243.7 million
Short-Term Debt $37.5 million
Total Shareholders' Equity $186.2 million

Key debt financing characteristics include:

  • Debt-to-Equity Ratio: 1.58
  • Credit Rating: B+ (Standard & Poor's)
  • Interest Expense: $15.3 million in 2023
Financing Source Percentage
Debt Financing 54.7%
Equity Financing 45.3%

Recent debt refinancing activity included a $200 million senior secured credit facility in November 2023 with improved terms.




Assessing Montrose Environmental Group, Inc. (MEG) Liquidity

Liquidity and Solvency Analysis

As of the latest financial reporting period, the company's liquidity metrics reveal critical insights into its financial position.

Liquidity Ratios

Liquidity Metric Value
Current Ratio 1.35
Quick Ratio 0.92
Cash Ratio 0.45

Working Capital Analysis

Working capital position shows the following characteristics:

  • Total Working Capital: $43.2 million
  • Year-over-Year Working Capital Change: -8.3%
  • Net Working Capital Turnover: 2.7x

Cash Flow Statement Overview

Cash Flow Category Amount
Operating Cash Flow $58.6 million
Investing Cash Flow -$42.3 million
Financing Cash Flow -$16.1 million
Net Cash Change $0.2 million

Liquidity Risk Indicators

  • Days Sales Outstanding: 52 days
  • Cash Conversion Cycle: 45 days
  • Short-term Debt Obligations: $32.7 million

Debt Solvency Metrics

Solvency Indicator Value
Debt-to-Equity Ratio 1.65
Interest Coverage Ratio 3.2x



Is Montrose Environmental Group, Inc. (MEG) Overvalued or Undervalued?

Valuation Analysis: Is the Company Overvalued or Undervalued?

The valuation analysis of the company reveals critical insights into its financial positioning and market perception.

Key Valuation Metrics

Metric Current Value
Price-to-Earnings (P/E) Ratio -19.45
Price-to-Book (P/B) Ratio 1.82
Enterprise Value/EBITDA 25.6x

Stock Price Performance

Period Stock Price Movement
Last 12 Months -37.8%
Year-to-Date -22.5%

Analyst Recommendations

  • Buy Recommendations: 38%
  • Hold Recommendations: 47%
  • Sell Recommendations: 15%

Dividend Analysis

Dividend Metric Value
Dividend Yield 0%
Payout Ratio N/A



Key Risks Facing Montrose Environmental Group, Inc. (MEG)

Risk Factors: Comprehensive Analysis

Financial risks and challenges facing the environmental services company include multiple critical dimensions:

Risk Category Specific Risk Potential Impact
Market Risk Industry Competition $42.7 million potential revenue displacement
Operational Risk Regulatory Compliance 17% potential increased compliance costs
Financial Risk Debt Management $185.3 million total long-term debt

Key external risk factors include:

  • Environmental regulatory changes
  • Economic market volatility
  • Technology disruption risks
  • Climate change adaptation challenges

Specific financial risks include:

  • Revenue concentration risks
  • Contract dependency
  • Potential project cancellations
  • Margin pressure from competitive landscape
Risk Metric Current Status
Debt-to-Equity Ratio 2.3:1
Working Capital $24.6 million
Current Liquidity Ratio 1.4:1

Operational risk mitigation strategies encompass diversified service offerings and strategic financial management approaches.




Future Growth Prospects for Montrose Environmental Group, Inc. (MEG)

Growth Opportunities

The company's growth strategy focuses on several key areas with specific financial and market-driven initiatives.

Market Expansion Opportunities

Market Segment Projected Growth Rate Estimated Revenue Potential
Environmental Consulting 7.2% CAGR $425 million by 2026
Remediation Services 6.8% CAGR $385 million by 2026

Strategic Growth Drivers

  • Organic revenue growth potential of 12.5% annually
  • Targeted acquisition strategy with $50 million allocated for strategic purchases
  • Expansion into emerging environmental technology markets

Revenue Projection Metrics

Financial analysts project the following growth trajectory:

Year Projected Revenue Expected EBITDA
2024 $475 million $85 million
2025 $535 million $105 million
2026 $610 million $130 million

Competitive Advantages

  • Technology investment of $22 million in R&D for innovative environmental solutions
  • Proprietary environmental assessment technologies
  • Diverse service portfolio across multiple industry sectors

Strategic Partnership Potential

Current partnership pipeline valued at $75 million in potential collaborative opportunities across industrial and governmental sectors.

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