Onterris, Inc. Q4 FY2024 earnings call

• 2024 was an exceptional year with revenue of $696.4 million and consolidated adjusted EBITDA of $95.8 million, both record highs. Organic revenue growth was 8.3%. - Cross-selling improved to 53% of 2024 revenue, and revenue retention rate was 96% for the third consecutive year. - Matrix Canada integration was successful, exiting 4Q at mid to high teen EBITDA margins. - International revenue increased to ~20% of total, with strong performance in Canada, Australia, and Europe. - Balance sheet leverage reduced to 2.1x at year-end. - Executive team canceled outstanding SARs, modified compensation structure, added board members, and audit committee review found no material issues.

Assessment, Permitting and Response: 4Q revenue was $50.8 million compared to $50.1 million in the prior year's quarter. Adjusted EBITDA was $7.9 million or 15.6% of revenue, compared to 18.3% in the prior year quarter. Measurements and Analysis: Revenues for the quarter increased 21.3% to $65.5 million. Adjusted EBITDA increased 88.7% to $18.3 million, or 27.9% of revenue. Remediation and Reuse: 4Q revenue increased 18.2% to $72.8 million. Adjusted EBITDA increased 53% to $12.7 million, and adjusted EBITDA margin expanded 400 basis points to 17.5%.

• 2025 revenue guidance: $735 million to $785 million. - Consolidated adjusted EBITDA guidance: $101 million to $108 million. - Expect strong organic growth of 7% to 9% long-term. - Environmental emergency response revenue expected to be $50 million to $70 million. - Cash flow conversion over 50% consistent with long-term target.

• Factors impacting 2025 performance: increased demand for water treatment solutions, macroeconomic impacts, fluctuations in environmental emergency responses, regulation changes, and project timing.

Q: Tim Mulrooney asked about margin expansion and cash flow conversion.

A: Vijay and Allan responded that there are continued margin accretion opportunities, particularly in the Remediation and Reuse segment, and cash flow conversion was a timing issue with expectations to improve in 2025.

Q: Jim Ricchiuti inquired about changes in project timelines and cross-selling traction.

A: Vijay stated no changes in project timelines yet, and cross-selling is strong with clients buying multiple services, deepening relationships.

Q: Brian Butler asked about ER work and international revenue growth.

A: Vijay said ER work is steady with no outsized projects, and international revenue growth is from organic opportunities in Canada, Australia, and Europe but mix is expected to remain predominantly North America-based.