Onterris, Inc. Q2 FY2024 earnings call

• Organic growth is on track to achieve annual guidance of 10%-12%. - Maintained strategic M&A cadence, acquiring Paragon in June and Spirit Environmental in July. - Benefiting from secular tailwinds like regulatory complexity driving demand for environmental services. - Margin improvement seen across segments, with 20-basis-point increase in consolidated adjusted EBITDA margins. - Confident in capitalizing on regulatory drivers and complexity, including PFAS and methane regulations.

Assessment, Permitting and Response (AP&R): Second quarter revenue was $53.4 million, down from $61.4 million in the prior year quarter due to lower environmental emergency response; adjusted EBITDA was $12.6 million, or 23.6% of revenue. Measurement and Analysis: Revenue for the quarter increased 9.5% to $54.8 million, primarily from organic growth; adjusted EBITDA increased 14.6% to $12.4 million, or 22.5% of revenue, with a 90 basis point margin improvement. Remediation and Reuse: Second quarter revenues increased 36.6% to $65.1 million, mainly due to the acquisition of Matrix; segment adjusted EBITDA margin improved due to acquisitions and improved Matrix margins, with Matrix on track to achieve mid-teen adjusted EBITDA margin by end of 2024.

• Reiterated full-year 2024 revenue guidance of $690 million to $740 million and consolidated adjusted EBITDA guidance of $95 million to $100 million. - Expect full-year organic growth of 10%-12%. - Matrix on track to achieve mid-teen adjusted EBITDA margin by end of 2024. - Anticipate significant opportunities from organic growth and strategic acquisitions in coming quarters.

• Uncertainty from recent Supreme Court rulings, but management believes business is positioned to navigate changes and capitalize on opportunities.

Q: Tim Mulrooney asked about quarterly organic growth; A: Vijay Manthripragada said they don't break out quarterly organic but are on track for annual 10%-12% organic growth.

Q: Jim Ricchiuti asked about M&A in post-Chevron world and resource allocation; A: Vijay Manthripragada said no change in resource allocation due to Chevron, and M&A outlook remains strong.

Q: Unidentified Analyst asked about contribution of Paragon and Spirit to guidance; A: Vijay Manthripragada said the small acquisitions have de minimis impact on annual guidance.

Q: Stephanie Yee asked about capital allocation and share buyback; A: Vijay Manthripragada said they've surpassed $10M EBITDA acquisition goal and Allan Dicks said share buyback isn't current focus as investments in acquisitions have strong ROIs