More than a year ago, Montrose Environmental Group announced it would pause acquisitions in 2025 to refocus on organic growth after historically expanding through acquisitions.
It set a goal to achieve 7%-9% annual organic growth in 2025. The market was skeptical when the company’s stock hit an all-time low of $10.51 last April, amid fears that the Donald Trump administration would ease regulations.
Instead, the company has blown past its own expectations. It reported that sales jumped 26% to $637.3 million for the first nine months of 2025.
It forecasts 2025 sales will jump to $810 million to $830 million, implying an 18% rise at the midpoint. It predicted its annual adjusted profit would climb to $112 million to $118 million, representing 20% growth at the midpoint.
“Demand for our services is elevated, driven by broader market forces, increased domestic industrial production in our key geographies and state and provincial regulations,” Chief Executive Vijay Manthripragada said in the third-quarter statement.
“This is our third consecutive quarter of record results, including free cash flow generation that exceeded expectations. Our outperformance year to date is primarily due to strong organic growth across all three of our segments and the resultant operating leverage, which continues to drive margin accretion.”
The pivot demonstrates that Montrose, which has made 76 acquisitions since its founding in 2012, can grow organically. The market has applauded the results, more than doubling the share price to $23.94 and an $846 million market cap (NYSE: MEG).
Montrose ranks No. 1 on the Business Journal’s annual list of environmental firms with local billings of $110 million, up 4.8% from last year.
The company’s executives declined to be interviewed, citing a quiet period before it releases fourth quarter and annual results on Feb. 26.
“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,” Manthripragada said in November.
Acquisition Restart
The company’s executives are well known in Orange County. Chief Financial Officer Allan Dicks won a Business Journal CFO of the Year Award in 2019.
In January, it hired a new chief operating officer, James Laws, who previously spent a decade at Aecom, where he became a senior vice president, with responsibility across environmental remediation, air quality, environmental health and safety, permitting and planning, and large-scale federal programs.
Earlier in his career, Laws spent 16 years at CH2M HILL (now Jacobs Solutions Inc.), leading large, technically complex federal and commercial environmental programs, including major Environmental Protection Agency and Department of Defense contracts.
“Joining Montrose presents an exciting opportunity to contribute to an innovative organization recognized for its thought leadership and purpose-driven culture,” he said in a statement.
Following its third-quarter report in November, Montrose executives said they expect to restart acquisition activity in 2026.
“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,” Manthripragada said.
Compared to prior acquisitions, the CEO said the company is evaluating how to acquire larger assets.
“We have seen some really nice opportunities internationally as we continue to scale in geographies like Canada and Australia,” he told analysts.
The global environmental industry is valued at $1.8 trillion, with an addressable environmental services market worth more than $650 billion, according to the Environmental Business Journal.
Tailwinds in this Market?
Despite changing regulations, clients have not changed their stance on the need for the environmental work Montrose offers, Manthripragada said, adding that the firm has actually “captured tailwinds” from the current environment.
“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,” the CEO told analysts.
Montrose works with approximately 6,300 clients in both the private and public sectors.
Manthripragada noted that less than 5% of revenue is related to the U.S. federal government and that the company has not been significantly impacted.
“Notably, we observed 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,” he said, pointing to states such as California, Colorado and Texas.
There are international opportunities as well with global requirements affecting key clients of Montrose, such as oil producers. The oil and gas industry is Montrose’s largest market.
“Market forces such as the recent EU methane regulations expand the global market for emissions monitoring and compliance,” Manthripragada said.
Montrose is also optimistic about the ongoing talks of rare earths and critical minerals partnerships across countries that should open the firm up to more opportunities in the U.S. and abroad. The company has also seen increased mining activity in Canada and Australia for environmental consulting, permitting, testing and water treatment.
Montrose’s water treatment business is getting an extra boost because of the U.S.’s recent clarification on regulating per- and polyfluoroalkyl substances (PFAS) chemicals.
“Because of our advanced water treatment capabilities, we are seeing kind of opportunities more broadly where PFAS is a contaminant of concern, but not the only one,” Manthripragada told analysts. “We are seeing opportunities across new industries, for example, like pharma and semiconductors.”
In reviewing recent operations, Montrose also made the decision to discontinue its renewable service line that included design, engineering and construction oversight of biodigesters converting maure to renewable natural gas on dairy farms.
Montrose “determined that it is prudent to exit” due to pullback from clients reacting to “the current administration’s policies around biogas in particular and some of the uncertainties related to it,” according to Manthripragada.
“We will continue to navigate the complexities of this evolving market landscape.”
