Hello, and welcome to the Montrose Environmental 4Q '25 Earnings Call. [Operator Instructions] Now I would like to turn the call over to Adrianne Griffin, Senior Vice President of Investor Relations and Treasury. You may begin.

Thank you, operator. Welcome to our fourth quarter 2025 earnings call. Joining me today are Vijay Manthripragada, our President and Chief Executive Officer; and Allan Dicks, our Chief Financial Officer. During our prepared remarks today, we will refer to our earnings presentation, which is available on the Investors section of our website. Our earnings release is also available on the website. Moving to Slide 2. I would like to remind everyone that today's call includes forward-looking statements subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially due to known and unknown risks and uncertainties that should be considered when evaluating our operating performance and financial outlook. We refer you to our recent SEC filings, including our yet-to-be filed annual report on Form 10-K for the fiscal year ended December 31, 2025, which identifies the principal risks and uncertainties that could affect any forward-looking statements and our future performance. We assume no obligation to update any forward-looking statements. On today's call, we will discuss or provide certain non-GAAP financial measures, such as consolidated adjusted EBITDA, adjusted net income, adjusted net income per share, and free cash flow. We provide these non-GAAP results for informational purposes, and they should not be considered in isolation from the most directly comparable GAAP measures. Please see the appendix to the earnings presentation or our earnings release for a discussion of why we believe these non-GAAP measures are useful to investors, certain limitations of using these measures, and a reconciliation of their most directly comparable GAAP measure. With that, I would now like to turn the call over to Vijay.

Thank you, Adrienne, and welcome to everyone joining us today. I will start with an update on our record 2025 results, provide 2026 guidance, and speak generally about the earnings presentation shared on our website. Allan will then provide the financial highlights, and following our prepared remarks, we will host the question-and-answer session. Before we get into the numbers, I want to acknowledge the extraordinary work of our approximately 3,500 colleagues around the world. 2025 was a record year across every key dimension: revenue, EBITDA, and cash flow. The reason we win quarter after quarter and year after year isn't luck or timing. It's because we bring science, field expertise, and urgency to the problems our clients need solved right now. Our results continue to demonstrate that environmental stewardship, human development, and shareholder value creation are not intention. At Montrose, we are for planet and for progress. As we have noted each quarter, our business is best assessed on an annual basis as demand for environmental science-based solutions does not follow consistent quarterly patterns. We manage our operations on an annual basis, and we recommend you similarly view our performance that way. With that context, I'm extremely pleased to report that 2025 was the strongest year in Montrose's history. We delivered full year revenue of $830.5 million and consolidated adjusted EBITDA of $116.2 million, both record highs and both well above the initial guidance we provided at the start of 2025. Let me put that record performance in context. Revenue grew 19.3% versus 2024, driven by organic growth of 12.7%, which meaningfully exceeded our long-term organic growth target of 7% to 9%. All 3 segments delivered solid organic revenue growth, thriving despite the ongoing regulatory uncertainty from the U.S. federal government. Consolidated adjusted EBITDA grew 21.3% year-over-year, and our consolidated…

Thanks, Vijay. Our record 2025 results demonstrate our ability to deliver for our clients, shareholders, and employees. These results included robust organic growth driven by ongoing cross-selling success, a third consecutive year of profitability improvement, driven by our focus on higher-margin services and operational efficiency, simplification of our balance sheet ahead of schedule, and lower-than-expected leverage due to record cash flow and earnings. Beginning with a discussion of our revenue performance. Fourth quarter revenue increased to $193.3 million compared to $189.1 million in the prior year period. Full year 2025 revenues increased by 19.3% versus 2024, totaling $830.5 million, well above our initial guidance. The primary drivers of full year revenue growth were strong organic growth across all 3 segments, totaling $81.8 million, or 12.7%, stronger-than-expected environmental emergency response revenue, and contributions from acquisitions closed in 2024. Turning to profitability. Fourth quarter consolidated adjusted EBITDA was $23.9 million, or 12.4% of revenue, compared to $27.2 million, or 14.4% of revenue, in the prior year quarter. Fourth quarter results benefited from improved margins in consulting and advisory services, offset by lower margins in the Measurement and Analysis and Remediation and Reuse segments, and expenses related to the wind down of our renewables business. For the full year, consolidated adjusted EBITDA increased 21.3% to $116.2 million, or 14% of revenue, resulting in our third consecutive year of margin expansion and 180 basis points of improvements since 2022. Turning to GAAP results. Net loss in the fourth quarter improved to $8.2 million, or $0.23 loss per diluted share attributable to common shareholders compared to a net loss of $28.2 million, or $0.90 net loss per diluted share in the prior year. This $20 million year-over-year improvement in net loss primarily resulted from lower stock-based compensation expense following the cancellation of stock appreciation rights…

[Operator Instructions] And our first question comes from the line of Tim Mulrooney with William Blair.

Congrats on capping off a strong year of execution here in 2025. I wanted to start out with a guidance question, just a simple one. You provided full year revenue and EBITDA outlook. But look, I know you're not a quarterly company, but I'm hoping you could provide just a little bit more color on how to think about your expectations for the cadence as we move through the year.

Yes. Tim, let me take that. It's a good question. You're right, this is not a quarterly business, but there are some interesting comparisons to '25 given some of the timing of the emergency response revenue. So at a high level, we expect revenues to be split roughly 50-50 front half/back half. And then within the front half, about 40% Q1, 60% Q2, okay? On EBITDA, we expect a split of -- just the first half, second half, 40% first half, 60% second half. And then within the first half, about 1/3 is Q1 and 2/3 Q2.

If I go back, Allan, and I go back and look at your EBITDA breakdown, it's actually not that different than what we've seen in some prior years. So...

That's right. Yes. Q1 is just a very seasonally slow quarter. Obviously, the timing of emergency response, which is impossible to predict, can move that around quite significantly. We always assume the midpoint of that $50 million to $70 million, and roughly apportion it with $15 million a quarter. So there could be a light quarter, there could be a heavy quarter. So that's certainly going to move those percentages around. But those numbers I just gave you assume an even distribution of that $60 million ER revenue, guidance midpoint.

You know what, another thing I wanted to ask, about switching gears completely, is this topic of AI. We saw a broad sell-off in engineering and design firms over the last couple of weeks due to concerns about disruption from AI and Montrose has occasionally comped against some of these companies. How do you think about the net impact from AI on your business, and more specifically, your engineering and design work?

Let me take that, Tim. Look, these are exceptional firms. Many of these firms you reference are our clients. And so I'll speak generically, Tim. You know the space as well as anyone, right? I think a lot of the concerns there seem to be tied to AI's ability to disrupt the more formulaic and algorithmic tasks that some of these firms do. Our work is much more bespoke, and I'm happy to expand into that further to the extent it's of interest. But as we think about a simple example is the complexity of the water treatment and how that's constantly changing or the field-based nature of our work. The gist of it is we are not an A&E firm, and Montrose is much more insulated from those dynamics than are some of the firms that you referenced, Tim. But look, we're not being Pollyannish about this. I mean, prior to my life at Montrose, I came from a technology firm. So I'm acutely sensitive to both the risks and opportunities that AI and large language models present. And I would frame it in the context of 3 frameworks that we look at. One is there is absolutely an opportunity for us to drive efficiency with the type of work that we do. And we are already in the process of doing that. And so what I mean by that is using large language model-based technologies to make ourselves more efficient, which should drive margins and create upside opportunity into the future. The second is on the revenue side as a large data aggregator. We are already in the early stages of harnessing some of this technology to work with our clients, so for example, with our sensor networks and real-time air monitoring. So there's a revenue stream opportunity that's new that we are pretty excited about. And then, independent of what we're doing internally, Tim, the technology companies that are driving a lot of this activity are Montrose's clients. And so it is early days. We have been careful not to talk about this too much until we really are ready to be very precise about exactly what we're doing. But it is already manifesting in our revenue, meaning the environmental work we're doing for technology companies, and specifically around data centers and AI, saw some really nice growth last year off of, again, a small base. And then we expect to continue to see that really nice growth into the foreseeable future. None of that is in our numbers in terms of our 7% to 9% organic growth today. We want to be careful about not overpromising. But there's clearly some really nice tailwinds and opportunity for Montrose as we look at this more broadly. Does that answer your question?

Yes, it does and makes a lot of sense, so thank you. Maybe I'll just wrap it up with one more, if you don't mind, if I squeeze one more in because I did hear you make that comment in your prepared remarks, Vijay, about some of these emerging thematics, these nascent opportunities that weren't necessarily around 18 months ago, whether it's -- I think you listed mining, pharma, semi, data center.

Yes.

And it goes to your commentary of seeing more tailwinds than headwinds. I'm just curious, as you think about these opportunities, which ones you're most excited about, I guess, as we move through 2026 and 2027.

Yes. We -- so a lot of these are already our clients, Tim. So some of them are growing opportunities as we speak, and some of the others are pipeline opportunities that have popped up. So just to explain what I mean, within the pharma space, the GLP-1 manufacturers, there are PFAS byproducts that come through the manufacturing process. And so they have been working with us to determine, given some of our unique IP and technology, to how to extract some of the short-chain PFAS that come out of that process. So that's a new set of opportunities. We haven't really addressed that before. That's in our pipeline now. I'm pretty excited about what that looks like, you call it, into the '27 onwards time frame. Contrasted with the data center work that I referenced earlier, that is already in a small way in our revenue and our revenue growth profile, and I expect that to expand further. As we think about the semiconductor industry, a lot of those have been clients of Montrose. As activity picks up and they start to build out some of these centers and manufacturing capabilities, there's a host of opportunities for us as we think about our integrated environmental platform that are opening up that didn't exist before. So we're quite excited about that. A lot of this is tied to our water technology business, Tim, which we expect to grow double digits in '26 compared to '25. And as we think about the long-term or even medium-term, this represents incremental upside to what we saw even 18 months ago. So that's what we meant in the commentary, and hopefully, that adds some more color.

And your next question comes from the line of Jim Ricchiuti with Needham & Co.

I appreciate the additional color, Allan, by the way, in response to Tim's question about thinking about the year. So thank you for that. You've touched on some of this in the question I have coming up is just where you see the biggest opportunities from an organic growth standpoint. And I think you highlighted, Vijay, some of the end markets, some of the -- but I'm curious how that might translate down to some of the business lines and where you see the biggest opportunity for organic growth.

Yes. There's a couple of areas where we're quite optimistic about what the future looks like, Jim. So one area, as I just alluded to, is our water technology business, which we expect to grow really nicely into the foreseeable future. It's going to be accretive to our growth trajectory over time. It certainly will be to our numbers in 2026. So that's a particular area of focus. We remain quite optimistic with our core business around testing and consulting as well. Despite all of the volatility, the uncertainty that's in the market right now is creating tailwinds for us. And so we're seeing ongoing demand for our testing business, both field-based and lab-based. And we're also seeing really nice demand tailwinds for our consulting business -- environmental consulting business. And there's been some really nice opportunities for us that have come up. As Tim asked about earlier, we've seen in Australia, for example, with our mining clients. In the Canadian market, we've seen a really nice uptick in activity tied to Prime Minister Carney's initiatives around Canadian infrastructure build-out. And then here at our home market in the U.S., the increased industrial activity is driving really nice demand tailwinds for us. And so as we look out into 2026, the type of business that we're seeing and the mix is a little different than we've seen in the past. But all of those areas excite me, and there's ways for us to harvest those opportunities, both organically and inorganically, which we're excited to jump on.

You guys are making some nice progress on cross-selling. Any particular areas or verticals that's been driving that improvement that we're seeing?

It's largely just execution, Jim. We alluded to this before. Our response business is a spectacular cross-sell engine. And strategically, it represents really nice opportunities post response to drive testing work and remediation work, specifically around soil and water remediation. And so a lot of the improvement you saw in 2025 was tied to ongoing execution against that original plan. So it's more of the same blocking and tackling. We've made investments in our commercial infrastructure. We've brought in some incredible talent, some very seasoned leaders that are sector leaders and well-known names in the industry. And so a lot of that has been the reason why we're seeing improvements on that metric, and we expect to see that into the foreseeable future.

One quick final question for me. You sound optimistic on the PFAS side of the business. Can you say what the PFAS revenues -- and you may have. I may have missed it -- represented in 2025 and what the growth rate was?

Yes. It remains about 10% to 15% of our business, Jim. And I think we've historically -- and this is really something we should have done a better job at -- but we've historically talked about our water technology business primarily in the context of PFAS. And what we're seeing now is that our water technology business is getting pulled into PFAS demand cycles, but it's more a family or a group of contaminants, including PFAS that we're treating. So for example, when we're dealing with landfill leachate, which has been a really nice growth market for us, the waste industry that is, we're removing all kinds of contaminants in addition to PFAS, not just PFAS. So as we look at it in aggregate, that's part of the reason why we see so much -- why we have so much optimism in what the future looks like, because it's now become embedded in the set of contaminants that folks want to remove. And so the numbers are still very similar to what we talked about before, Jim, 10% to 15% of revenue with double-digit growth expected into 2026.

[Operator Instructions] And our next question comes from the line of Tami Zakaria with J.P. Morgan.

Congrats on the wonderful results. Question on M&A. Good to see you're planning on doing M&A. Could you elaborate on the potential size of the deals in terms of maybe revenue or EBITDA that you're looking at, which segments you're focused on, any sense of the timing, first half versus back half? Any color would be helpful.

Yes, Tami, let me start with that, and Allan, you should certainly jump in. There is nothing imminent. And so as you look out to Q1 or even the first part of Q2, it is unlikely we're going to do anything there from an acquisition perspective. We're going to be very measured. We're talking about small, bolt-on acquisitions. We are very sensitive to leverage. As you know, we've talked about that, and we think about this in the context of broader capital allocation strategies to maximize returns. So with that background and with that underpinning, we see some really nice opportunities on the testing side of our business, Tami, and we see some really nice opportunities across the Australian, Canadian, and U.S. markets on the consulting side of our business. And so we will likely start to, in a measured way, bolt on some really accretive assets, both strategically accretive and financially accretive, sometime in the back half of the year. As you know, we don't control deal timing, so that may fluctuate a little bit. But with what we see in the pipeline today, from a timing perspective, should we close transactions, and we may not close any, but we certainly expect to close some, we will likely do it in the back half of this year.

And a follow-up on the quarterly color you gave, which was very helpful. I just wanted to understand 1Q in particular. It seems like it's going to start off a little lighter before things pick up. So is it just emergency response revenues being lumpy? Or is there headwinds in some other segments as well that's making 1Q smaller and then we expect to pick up as the year progresses. So what's driving the revenue outlook for the first quarter?

Yes, I can take that. You're right. It is primarily lower emergency response. We're 2/3 of the way through Q1, and so we have visibility at least for that period of time into what emergency response has been. And then to a lesser extent, there is some project timing and tougher comparisons year-over-year in Q1 that lighten as we progress through the year.

There's no further questions at this time, and that concludes today's call. Thank you all for joining. You may now disconnect.