Onterris, Inc. · NYSE:ONT
Onterris — Montrose Environmental Group — Q4 2023 Earnings Presentation
29 slides from Onterris's earnings presentation, Feb 29, 2024
Slide 1: Fourth Quarter & Full Year 2023 Earnings Call
Fourth Quarter & Full Year 2023 Earnings Call February 29, 2024
Slide 2: Safe Harbor
Safe Harbor Statements contained herein and in the accompanying oral presentation contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may be iden
Slide 3: Operating Overview
Operating Overview
Slide 4: 2023 Highlights Full Year 2023
2023 Highlights Full Year 2023 • Record revenue, Consolidated Adjusted EBITDA(1) and Cash Flow from Operations • Strong expansion in Operating Segment and Consolidated $624.2M $1.07 Adj. EBITDA(1) as percent of revenue • Diluted Adj. EPS(1) increased 24% and Cash Flow from Operations more than doubl
Slide 5: Strong Revenue Retention and Increased Penetration of Existing Clients
Strong Revenue Retention and Increased Penetration of Existing Clients • Successful cross-selling and customer revenue Cross-Selling as a Percent of Revenue(1) (Dec FYE) retention drive organic growth over time - Consistent growth of cross-selling(1) activity to over 50% of revenue in 2023 ~51% 35%
Slide 6: Strong Record of Long-Term Growth
Strong Record of Long-Term Growth Revenue • Continued market share gains due to (i) integrated 2020-2023 CAGR(1) (Core(2)): 37% business model driving cross selling and (ii) patented ($ in Millions, Dec FYE) technology $624 $546 $544 $91 • 2023 organic growth builds on 15% average organic $88 $328 $
Slide 7: Capabilities Aligned With Sustainable and Secular Tailwinds
Capabilities Aligned With Sustainable and Secular Tailwinds Focus on Environmental Matters Creates Tailwinds for Montrose ASSESSMENT, PERMITTING MEASUREMENT REMEDIATION & REUSE AND RESPONSE AND ANALYSIS Advisory Response Testing Water Treatment Remediation Renewable Climate Change & Event Driven Res
Slide 8: Recent M&A Overview
Recent M&A Overview • Successfully completed seven 2014 2014 value-enhancing acquisitions in 2023 and YTD 2024 • Consistently targeted additive services, geographies, clients and technologies • Demonstrated ability to effectively integrate, cross-sell and create synergies • Acquisition pipeline rema
Slide 9: Matrix Solutions Acquisition: An Example of Value Creation
Matrix Solutions Acquisition: An Example of Value Creation Transaction Survey: Key Outcomes of the Matrix Solutions Acquisition • In June 2023, we completed a $48.6 million • Margins: Matrix Solutions Adjusted EBITDA(1) as a percent of revenue acquisition of Matrix Solutions, one of Canada’s almost
Slide 10: Financial Overview
Financial Overview
Slide 11: Q4 and Full Year 2023 Revenue Performance
Q4 and Full Year 2023 Revenue Performance Double-Digit Revenue Growth Q4 2023 Revenue As Reported and Excluding Discontinued Services(1) ($ in Millions) • Q4 revenue up 18.8% to $165.7M, as reported $165.7 $139.5 • 2023 revenue grew 14.7% to $624.2M, as reported • Q4 and 2023 revenue growth driven b
Slide 12: Q4 and Full Year 2023 Consolidated Adjusted EBITDA Performance
Q4 and Full Year 2023 Consolidated Adjusted EBITDA(1) Performance Consolidated Adjusted EBITDA(1) Growth Q4 2023 Consolidated Adjusted EBITDA(1) As Reported and Excluding Discontinued Services and 2022 Start-up Losses(2) and Margin Expansion in 2023 ($ in Millions) $17.8 $17.5 • Q4 Consolidated Adju
Slide 13: Q4 and Full Year 2023 Diluted Adjusted Net Income per Share
Q4 and Full Year 2023 Diluted Adjusted Net Income per Share(1) Strong Adjusted Earnings(1) Growth Q4 2023 Diluted Adjusted Net Income per Share(1) • Q4 Diluted Adj. EPS(1) up 8.0% to $0.27 $0.25 $0.27 • 2023 Diluted Adj. EPS(1) grew 24.4% to $1.07 • Q4 and 2023 Diluted Adj. EPS(1) growth driven by h
Slide 14: Assessment, Permitting and Response Performance
Assessment, Permitting and Response Performance Q4 2023 Revenue and Operating Segment Adj. EBITDA Segment Commentary ($ in Millions, % as a Percent of Segment Revenue) • Revenue growth primarily due to strong organic growth in advisory services, positive contributions $45.2 $50.1 $9.2 from acquisiti
Slide 15: Measurement & Analysis Performance
Measurement & Analysis Performance Q4 2023 Revenue and Operating Segment Adj. EBITDA Segment Commentary ($ in Millions, % as a Percent of Segment Revenue) • Revenue growth primarily driven by strong organic $54.0 growth across lab and field services, with particular $46.7 $9.7 $9.7 strength in air q
Slide 16: Remediation & Reuse Performance
Remediation & Reuse Performance Q4 2023 Revenue and Operating Segment Adj. EBITDA Segment Commentary ($ in Millions, % as a Percent of Segment Revenue) • Revenue growth was primarily driven by $61.6 $47.6 acquisition of Matrix, and offset by (i) lower revenue $8.6 $8.3 in ECT2 given delays in PFAS r
Slide 17: Attractive Capital Structure
Attractive Capital Structure Commentary Equity Market Capitalization • Flexible balance sheet to further invest in innovation and acquisitions in highly 12/31/2023 fragmented industry Preferred • Liquidity of $148.2 million including Equity $23.2 million of cash and $125.0 million of $182M(3) availa
Slide 18: Disciplined Capital Allocation Approach to Drive Strong Returns
Disciplined Capital Allocation Approach to Drive Strong Returns © 2024 Montrose Environmental Group, Inc. Proprietary. 18
Slide 19: Outlook
Outlook
Slide 20: 2024E Outlook
2024E Outlook Outlook Driven by Market Tailwinds, Revenue ($ in Millions) Growth Initiatives and Margin Optimization $675 - $725 • Revenue is expected to be in the range of $675 - $624(2) $725 million and Consolidated Adjusted EBITDA(1) is expected to be in the range of $90 - $95 million • Anticipat
Slide 21: Investment Highlights
Investment Highlights Unique, vertically integrated Significant scale with global reach environmental company serving repeat client base Large TAM and secular tailwinds Consistent record of strategically and backed by regulatory and corporate financially accretive acquisitions initiatives coupled wi
Slide 22: Appendix
Appendix
Slide 23: Full Year 2023 Segment Performance, Excluding Discontinued Services and Adjustment for Prior Year Start-up Losses
Full Year 2023 Segment Performance, Excluding Discontinued Services and Adjustment for Prior Year Start-up Losses Total Operating Segments Assessment, Permitting and Response ($ in mm; % of revenue) ($ in mm; % of revenue) $523.8 (1) $615.4 (1) $116.5 $220.7 $52.1 $95.8 (2) $187.2 $37.1 (2) 18.3% 18
Slide 24: Summary of Oaktree A-2 Preferred
Summary of Oaktree A-2 Preferred Investment Summary Post-IPO Terms Governance • In April 2020, Oaktree • No fixed maturity date • Oaktree has the right to Capital purchased $175mm appoint one representative - Repayable in cash at on the Montrose board of of Series A-2 Preferred Company’s option (sub
Slide 25: Non-GAAP Financial Information
Non-GAAP Financial Information In addition to our results under GAAP, in this presentation we also present certain other supplemental financial measures of financial performance that are not required by, or presented in accordance with, GAAP, including, Consolidated Adjusted EBITDA, Consolidated Adj
Slide 26: Reconciliation of Net Loss to Adj. Net Income and Diluted Adj. Net Income per Share
Montrose Environmental Group, Inc. Reconciliation of Net Loss to Adj. Net Income and Diluted Adj. Net Income per Share (In thousands except per share amounts) For the Quarter Ended For the Year Ended December 31, December 31, 2023 2022 2023 2022 Net loss $ (1,441) $ (10,812) $ (30,859) $ (31,819) (1
Slide 27: Reconciliation of Net Loss to Adj. Net Income and Diluted Adj. Net Income per Share
Montrose Environmental Group, Inc. Reconciliation of Net Loss to Adj. Net Income and Diluted Adj. Net Income per Share (In thousands except per share amounts) Q uarter Ended Year Ended December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, December 31, 2023 2023
Slide 28: Reconciliation of Net Loss to Consolidated Adjusted EBITDA
Montrose Environmental Group, Inc. Reconciliation of Net Loss to Consolidated Adjusted EBITDA (In thousands) For the Quarter Ended For the Year Ended December 31, December 31, 2023 2022 2023 2022 Net loss $ (1,441) $ (10,812) $ (30,859) $ (31,819) Interest expense 2,286 1,229 7,793 5,239 Income tax
Slide 29: Reconciliation of Net Loss to Consolidated Adjusted EBITDA
Montrose Environmental Group, Inc. Reconciliation of Net Loss to Consolidated Adjusted EBITDA (In thousands) Q uarter Ended Year Ended December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, December 31, 2023 2023 2023 2023 2022 2022 2022 2022 (a) 2023 Net loss $
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