Montrose Environmental Group, Inc. (NYSE:MEG) Q3 2023 Earnings Call Transcript

David Ridley-Lane: And then last one from me, I know you don’t normally talk about kind of bookings or backlog, but those metrics part of the reason you have the confidence to reiterate your guidance for the full year. And any update on sort of the European PFAS pilots.

Vijay Manthripragada: Yes. Europe is going really well and the acquisition of Vandrensning has been very additive to that portfolio. We still have a small footprint, David, but that’s going to be a really nice story that we’ll share with you as we talk through 2024. The war notwithstanding, the continued momentum in that market is quite positive. And so we’re really happy that we made the investments that we did. As it relates to our Q4, yes, we don’t, we don’t really talk about bookings and backlog, it’s not relevant to every part of our business. But we do have strong visibility on an annualized basis. And given the trajectory of the company so far, we’re feeling quite good about the Q4 outlook.

David Ridley-Lane: Right. Thank you very much.

Vijay Manthripragada: Thanks.

Operator: The next question comes from Wade Suki with Capital One. Please go ahead.

Wade Suki: Good morning, everyone, and thanks for taking my questions.

Vijay Manthripragada: Hey, Wade.

Allan Dicks: Hi, Wade.

Wade Suki: Just, just a follow-up, I think it was on Tim’s question earlier. And I hate to put you on the spot. But as we think about margins heading into 2024 maybe you could walk us through why margins in 2024 might be lower than, let’s say the, you know, Q2, Q3 average. I mean is it just a function of CTEH normalizing or am I thinking about it the wrong way…

Vijay Manthripragada: Yes, right. No, that’s — if you heard that that’s not what we’re saying. We’re not ready to guide to margins or EBITDA next year. We’re very bullish on the topline given the momentum in the business. But we’re feeling pretty good about where margins are and the ability over time to continue to move those up.

Allan Dicks: Yes. Wade, I would say, it’s the opposite. We are not calling for lower margins and we haven’t guided 2024. But what I was saying earlier, is that the work we’ve done this year with the conscious focus on improving margins and cash flow, we think that we will continue to harvest that the benefits of that into 2024, and we’ll couple that with getting back to our accelerated organic growth trajectory.

Wade Suki: Awesome. Very helpful, thank you. And then again, just to kind of follow-up on Tim’s question earlier on water treatment you know last quarter you discussed, some of the sort of uncertainties related to the low contaminant thresholds that were being proposed. And I’m wondering if you could give us an update on what if any changes you’re seeing in customer behavior along those lines. And maybe just taking a step back, I mean is this a business that’s been pushed out maybe a couple of quarters or you know when do you expect sort of a major inflection point in this part of the business.

Vijay Manthripragada: Yes, we — it’s a great question Wade. We just met with some of our large clients and they are also looking for a little bit more clarity from the regulatory agencies before they really jump into this. But they’re certainly prepared to do so. So we’ve seen I think what we would consider forward progress on the projects, but not yet ready to pull the trigger, which is why we say that as we kind of think about our ECT2 business, which is a combination of our water and biogas business that really in the Q2, Q3 timeframe of next year is when we think you’ll start to see some of this uncertainty unwind and getting back to a positive foot. With the one caveat there being, it is dependent on the regulatory confirmations, which are expected towards the end of this year and early part of next year.

Wade Suki: Got you. Great thank you all very much. That’s all I had.

Vijay Manthripragada: Thanks, Wade.

Operator: [Operator Instructions] The next question comes from Stephanie Yee with JP Morgan. Please go ahead.

Stephanie Yee: Hi, good morning.

Vijay Manthripragada: Hey Stephanie.