Publicly traded California environmental firm relocates to Arkansas
August 16-22, 2021
By Wesley Brown
Montrose Environmental Group Inc., a fast-growing, publicly traded company that has doubled its sales amid the COVID-19 pandemic, announced the relocation of its principal executive office from Irvine, Calif., to North Little Rock on Aug. 6.
Billed as a one of the nation’s “leading environmental solutions company focused on supporting commercial and government organizations, Montrose recently posted revenues of $270 million for the first six months of 2021, which is up 100% from a year ago.
“Montrose continues to invest in and grow in all our key markets, including both California and Arkansas. We remain fully committed to our teams, clients and communities in both states. Our Board of Directors and management team are grateful for the time, substantive incentives, and support that Gov. Hutchinson and the State of Arkansas have provided to Montrose. We are excited about our future,” Montrose CEO Vijay Manthripragada said a statement announced his company’s move to Arkansas.
According to Secretary of Commerce Mike Preston, Montrose’s exit from California is expected to create 90 new, high-paying jobs over time in Arkansas. Commerce Department spokeswoman Alisha Curtis said Montrose was offered state incentives through the state Economic Development Commission’s Create Rebate and Tax Back programs. The Create Rebate program provide qualified businesses a financial incentive equal to 3.9% to 5% of the annual payroll of new full-time permanent employees.
Under the Tax Back program, qualified businesses investing at least $100,000 with a job creation agreement through the Advantage Arkansas or Create Rebate programs can apply for a refund of sales and use tax within 24 months. Tax Back applicants must also obtain an endorsement resolution from a local governing authority authorizing the refund of its local taxes. The local incentive program is also a refund of sales and use taxes for the city and county.
“Montrose Environmental will be a great addition to the Arkansas business community,” said Preston. “The company’s commitment to innovation and sustainability align with the goals and values of Arkansans who enjoy the benefits of living in a state focused on outdoor pursuits.”
In April 2020, one month after Gov. Asa Hutchinson issued Arkansas’ shelter-in-place and social distance orders due to the COVID-19 pandemic, Montrose acquired Arkansas-based scientific consulting firm, CTEH, which specializes in emergency preparedness, response and recovery. At the time, CTEH had more than 170 employees in Arkansas, Texas, Colorado, Indiana, Louisiana, California New York, and Washington state. Terms of that deal were not disclosed.
The company plans to expand its existing facility in North Little Rock to house Montrose’s growing team in Arkansas. According to the company’s quarterly 8K filing with the federal Securities and Exchange Commission, the former California-based environmental firm has approximately 70 offices across the U.S., Canada and Australia and over 2,000 employees as June 30.
“I’m pleased to welcome Montrose Environmental to Arkansas,” said Hutchinson. “The 90 high-paying jobs being created by the company are a testament to the hard work and dedication that our state’s workforce possesses. I am confident that Montrose will find the talent they need to grow and prosper for many years to come.”
In the company’s second quarter earnings report released on Aug. 10, company officials said the environmental firm has seen strong organic growth in the past year from its Assessment Permitting and Response segment acquired from the CTEH, “which continues to benefit from pandemic response services and organic growth in our environmental advisory services.”
On July 27, Montrose completed an initial public offering of common stock where it sold 11.5 million shares at $15 per share to raise proceeds of more than $161 million. The company first began trading on the New York Stock Exchange a year ago through an IPO sale of 10 million shares between $15 and $17 per share.
In the company’s second quarter earnings report on Aug. 10, Montrose reported revenues of $136.7 million, an 84% increase compared to $73.8 million a year ago. However, Arkansas’ newest publicly traded firm posted a net loss of $14.5 million compared to a profit of $13.2 million for the three-month period ended June 30.
“We are proud to report another quarter of exceptional results as we continue to execute our strategy,” stated Manthripragada. “We were encouraged to realize first half organic growth of 9% excluding our response business, CTEH, and 47% including our response business. Montrose is best assessed on an annual basis and elevated first half demand across all of our segments puts us firmly on track for another year of record revenue and earnings.
“These results belong to our team and I remain incredibly grateful to the continued efforts of our colleagues around the world in what remain challenging and uncertain times for many. As a company, we remain vigilant but optimistic about the long-term opportunity for Montrose,” continued Manthripragada.
Besides the CTEH merger in 2020, Montrose has announced three other acquisitions in 2021. In June 2021, Montrose acquired Vista Analytical Laboratory of El Dorado Hills, Calif, an environmental laboratory for the testing and analysis of polyfluoroalkyl substances (PFAS), dioxins and other persistent organic pollutants.
Vista holds 21 state accreditations and is certified by the California Environmental Laboratory Accreditation Program to perform PFAS analysis for all 31 PFAS compounds currently being monitored in California. Vista’s client base is broad and includes many private companies, state and federal agencies, and the federal government, including the Department of Defense.
A month later, Montrose acquired Environmental Intelligence LLC in Laguna Beach, Calif., an environmental consulting firm that works in wildfire mitigation, biological assessments, and other environmental services. In August 2021, Montrose acquired SensibleIoT, LLC, a technology and software platform that will allow the Arkansas firm to integrate and enhance its environmental services and data analytics for clients.
Following Tuesday’s quarterly earnings report, Montrose’s share closed at $51.44 per share, up $1.37 or 2.7%. In the company’s yearly outlook, Montroso said it has “successfully grown revenue in excess of 20% every year and expect to again exceed that threshold in 2021.” In addition, the company said it expects to continue adding “strategically and financially accretive acquisitions.”
