Onterris, Inc. (ONT) | The Buildout — AI Infrastructure
The Verdict
Onterris is an environmental services and solutions provider. It supplies environmental consulting, testing and laboratory services, air measurement, water treatment, emergency response, and remediation. Its role in the AI buildout is indirect: data centers, semiconductor fabs, and technology clients require environmental permitting, air monitoring, water treatment, and laboratory analysis, and Onterris sells those services. It does not supply any component of AI infrastructure essential to data center construction or operation.
| Market Cap | — |
| Revenue (TTM) | $821M |
| Revenue Growth | +14.2% |
| EBITDA Margin (TTM) | 8.0% |
| Net Debt | $378M |
| Earnings Beats | 0 of 2 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- FY2025 revenue was $830.5M, up 19.3%, with organic growth of 12.7%—above the 7–9% long-term target.
- Adjusted EBITDA grew 21.3% to $116.2M at a 14.0% margin; operating cash flow was $107M, a 93% conversion.
- Cross-selling rose to 62% of revenue in 2025 from 53%, supporting the integrated-platform claim.
- Private-sector clients are roughly 90%, and U.S. federal exposure is less than 3%.
- Water treatment TAM exceeds $250B; PFAS is 10–15% of revenue and management expects double-digit water-technology growth in 2026.
What We’re Watching
- The largest client was 17.8% of FY2025 revenue, tied to 285 projects and one large emergency response event.
- Emergency response has gone historically quiet; revised guidance excludes future events that have not yet occurred.
- Pass-through revenue fell from about 25% historically to below 20% in 2026; management said the decline surprised them.
- The board-led strategic review has no decision or timetable; rights plan details were deferred to an 8-K.
The core thesis is mixed. Margin and cash-flow commitments remain intact, and management says end-market demand is strong, but reported revenue is contracting and the 2026 top-line guide was cut materially two quarters after it was set. The open question is whether core organic growth can reaccelerate toward 7–9% once pass-through and emergency response are stripped out.
Earnings
Q2 FY2026 revenue was $186.7M, down $47.9M year over year. Adjusted EBITDA was $31.9M, a 17.1% margin, up from 16.9% a year earlier. The standout comparison was event-driven: the prior-year quarter included about $53.6M of revenue from a single environmental emergency response event and the recovery work that followed.
| Metric | Q1 FY2026 | Q4 FY2025 | Q1 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $168M | $193M | $178M | −5.2% |
| Gross margin | 32.3% | 32.4% | 39.0% | -670bps |
| EBITDA | $6M | $9M | $3M | +111.1% |
| EPS | $-0.35 | $-0.23 | $-0.56 | −37.3% |
| Consulting and Treatment revenue | $125.6M | $171.7M | Down $46.1M y/y | |
| Measurement and Analysis revenue | $61.1M | $62.8M | Down $1.7M y/y |
lower pass-through revenue, which consists of revenue on subcontractor and nonlabor direct costs are generally at far lower margins than labor-based service revenue.— Allan Dicks, CFO, 2026-08-05
Management tone: Management moved from record-focused confidence in February to a more defensive, but still operationally detailed, tone in August. They candidly said the pass-through revenue reduction surprised them, maintained that every outcome in the revised EBITDA guide would be a record, and were guarded on strategic-review details.
Management Guidance
Management updated FY2026 guidance to revenue of $740M–$790M and adjusted EBITDA of $117M–$120M, with adjusted EBITDA margin at the midpoint of ~15.5%. The revised view assumes lower pass-through and emergency response revenue, some ongoing air-permitting waivers in H2, and excludes emergency events that have not yet occurred. H2 operating cash flow is expected at $70M–$80M, with year-end leverage of ~2.5x.
Trajectory
Reported revenue is decelerating. From Q2 FY2025 through Q1 FY2026, quarterly revenue declined from $234M to $225M, then $193M, then $168M. The decline reflects the event-driven comparison from 2025 and lower pass-through revenue, which historically ran near 25% of revenue and is now below 20%. Margins are mixed: trailing gross margin compressed, but Q2 FY2026 adjusted EBITDA margin still rose 20 bps to 17.1% on lower revenue.
The Model
The model projects FY+1 revenue of $880M and EBITDA of $92M, a 10.5% margin. For FY+2, the model projects revenue of $970M and EBITDA of $115M, an 11.9% margin. The near-term revenue estimate sits above the updated FY2026 revenue guidance range of $740M–$790M; the FY+2 step-up is tied to the source's stated growth drivers—water treatment, data centers, semiconductors, GLP-1 pharma, and mining.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $830M | $880M | $970M |
| YoY Growth | — | +6.0% | +10.2% |
| EBITDA | $63M | $92M | $115M |
| EBITDA Margin | 7.5% | 10.5% | 11.9% |
Projections are the median of 5 independent model runs. The model’s revenue sits 5.2% above analyst consensus.
Management updated FY2026 guidance to revenue of $740M–$790M and adjusted EBITDA of $117M–$120M, with adjusted EBITDA margin at the midpoint of ~15.5%. The revised view assumes lower pass-through and emergency response revenue, some ongoing air-permitting waivers in H2, and excludes emergency events that have not yet occurred. H2 operating cash flow is expected at $70M–$80M, with year-end leverage of ~2.5x.
What Could Go Right — and Wrong
- Core organic growth returns to high single digits after stripping pass-through and emergency response.
- A major new environmental emergency response event adds high-margin revenue not included in guidance.
- Data center, semiconductor, or GLP-1 environmental work becomes quantified and material.
- Temporary air-permitting waivers reverse and deferred air testing work returns.
- Bolt-on M&A restarts in H2 2026 and is accretive.
- Emergency response remains historically quiet and no new event occurs.
- Air-permitting waivers widen or persist, pushing air testing revenue into 2027.
- Core organic growth is low single digit once pass-through and emergency response are excluded.
- The strategic review distracts management or delays the planned M&A restart.
Looking Ahead
The next twelve months hinge on whether the revised 2026 base is reliable and whether the board-led strategic review resolves. Management needs to deliver Q3 revenue of $190M–$210M and 17–18% EBITDA margins, then show H2 operating cash flow and year-end leverage near 2.5x. Separately, the source points to a possible M&A restart in the back half of 2026 and unquantified data-center/AI environmental demand that could become more visible.
- Q3 2026Q3 FY2026 results — Tests revised $190M–$210M revenue and 17–18% EBITDA margin guide.
- H2 2026H2 operating cash flow — Management expects $70M–$80M; key cash conversion test.
- Year-end 2026Year-end leverage — Checks progress toward ~2.5x leverage after buybacks.
- Back half 2026Bolt-on M&A restart — Tests return to small testing and consulting/treatment deals.
- No timetable setStrategic review update — Board could announce alternatives or a standalone decision.
- 2027 onwardsGLP-1 PFAS removal — Described as a pipeline opportunity for 2027 onwards.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $696M | $830M | $821M | +19.3% |
| Gross Margin | 39.8% | 38.5% | 37.4% | 130bps |
| EBITDA | $28M | $63M | $242M | +126.4% |
| EBITDA Margin | 4.0% | 7.5% | 8.0% | +357bps |
| Net Income | −$62M | −$1M | $6M | +98.7% |
| Free Cash Flow | −$2M | $91M | $1.3B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)37.4%
- EBITDA Margin (TTM)8.0%
- Net Margin (TTM)0.7%
- ROIC1.5%
- FCF Conversion108.7%
- SBC / Revenue4.6%
The Company
Onterris is an environmental services and solutions company. It provides environmental consulting, assessments, permits, emergency response and recovery, toxicology consulting, environmental testing and laboratory services, air measurement, water treatment, and remediation/reuse. The 10-K states that it services complex, often non-discretionary environmental needs and does not rely on any single service, product, political approach, or regulatory framework. Until April 2026 the company was named Montrose Environmental Group.
The company operates across the United States, Canada, and Australia, with approximately 120 offices and approximately 3,500 employees as of March 31, 2026. In Q1 2026, it realigned segments into Consulting and Treatment and Measurement and Analysis, with Corporate unchanged. Management says roughly 90% of clients are private sector and federal government exposure is less than 3% of revenue.
Business Segments
Competitive Landscape
The 10-K names large engineering, testing, and treatment firms across its segments, alongside smaller businesses. ONT competes through an integrated environmental platform and cross-selling, with cross-selling at 62% of revenue in 2025.
- ERMNamed in the 10-K consulting-side competitor list; not otherwise discussed.
- Named in the 10-K treatment-side competitor list; not otherwise discussed.
- SGSNamed in the 10-K testing-side competitor list; not otherwise discussed.
- Named in the 10-K treatment-side competitor list; not otherwise discussed.
Supply Chain
ONT is an environmental services provider that depends on skilled personnel, lab and office capacity, and third-party component suppliers for certain product offerings. It serves private-sector industrial, technology, and municipal clients; no reviewed neighbor transcript mentioned ONT by name.
More on ONT: Earnings recap