Financial Performance Overview

Onterris, a leading provider of environmental services, has reported its financial results for the three and six months ended June 30, 2026. The company’s revenues decreased by 20.4% and 13.9% respectively compared to the same periods in 2025, driven by lower demand for its Consulting and Treatment and Measurement and Analysis services.

Despite the revenue decline, Onterris was able to maintain profitability, with net income of $1.4 million in the second quarter and a net loss of $11.3 million for the first half of the year. The company’s Segment Adjusted EBITDA margin remained relatively stable at 23.5% and 20.8% for the three and six month periods.

Segment Performance

Onterris operates two main business segments - Consulting and Treatment, and Measurement and Analysis. The Consulting and Treatment segment, which provides environmental consulting, engineering, and implementation services, saw revenues decline by 26.9% and 17.3% in the second quarter and first half of 2026 respectively. This was primarily due to lower demand for emergency response and recovery services, as well as the wind-down of the company’s renewables business.

However, the Consulting and Treatment segment was able to maintain a healthy Segment Adjusted EBITDA margin of 22.2% and 20.0% for the quarter and six months, respectively, driven by improved profitability in the core consulting and water treatment businesses.

The Measurement and Analysis segment, which provides environmental testing and laboratory services, also experienced revenue declines of 2.8% and 5.6% in the second quarter and first half of 2026. This was mainly attributable to lower field services revenues, partially offset by an increase in lab testing revenues. The Segment Adjusted EBITDA margin for Measurement and Analysis decreased to 26.2% and 22.5% for the quarter and six months, respectively, due to lower operating leverage from the revenue decline.

Profitability and Expenses

Onterris was able to partially offset the revenue declines through cost management, with cost of revenues decreasing by 21.4% and 14.7% in the second quarter and first half of 2026, respectively. This was driven by lower non-labor project costs as a percentage of revenues, partially offset by higher project labor costs.

Selling, general and administrative (SG&A) expenses also decreased by 14.6% and 11.2% in the second quarter and first half of 2026, respectively, primarily due to lower labor costs, including reduced bonus accruals, and a decrease in bad debt expense. However, SG&A as a percentage of revenues increased to 33.7% and 35.0% for the quarter and six months, respectively, due to the lower revenue base.

Depreciation and amortization expenses remained relatively flat compared to the prior year periods. Interest expense increased by 14.7% and 11.2% in the second quarter and first half of 2026, respectively, due to higher debt levels.

Liquidity and Capital Resources

Onterris maintained a strong liquidity position, with $148.1 million available under its 2025 Credit Facility and $12.7 million in cash as of June 30, 2026. The company used cash generated from operations and borrowings under the credit facility to fund its operations, make capital expenditures, and repurchase common stock.

Cash flow from operating activities was negative $5.5 million for the first half of 2026, compared to positive $27.4 million in the prior year period. This was primarily due to a decrease in earnings before non-cash items and a higher increase in working capital, driven by a decrease in accrued payroll and benefits and accounts payable.

Investing activities used $11.1 million in cash, mainly for the purchase of property and equipment. Financing activities provided $18.3 million in cash, primarily from net borrowings under the 2025 Credit Facility, partially offset by common stock repurchases and contingent consideration payments.

Outlook and Key Factors

Onterris’ financial performance continues to be influenced by several key factors, including:

• Acquisitions: The company has been an active acquirer, which has expanded its service capabilities and geographic reach. Amortization of intangible assets and other acquisition-related costs remain significant expenses.

• Organic Growth: Onterris has historically grown organically, and management expects this to continue. However, the company’s revenues and earnings can be volatile due to the cyclical nature of the environmental services industry and the impact of large emergency response projects.

• Revenue Mix: Shifts in the mix of revenues between the Consulting and Treatment and Measurement and Analysis segments can impact the company’s profitability and margins.

• Financing Costs: Interest expense is a significant expense for Onterris, and the company expects it to remain so as it continues to leverage its credit facility to support operations, acquisitions, and share repurchases.

• Corporate and Operational Infrastructure Investments: Onterris has made and expects to continue making investments in its corporate infrastructure to support growth, which should allow it to improve margins over time.

• Seasonality: The company’s operating results typically experience quarterly variability, with generally lower revenues and earnings in the first and fourth quarters, and higher revenues and earnings in the second and third quarters.

Looking ahead, Onterris’ ability to navigate the challenges of the current market environment and continue executing on its strategic initiatives will be crucial to its future performance.

Strengths and Weaknesses

Strengths:

• Diversified service offerings across the environmental services lifecycle
• Established market presence and strong brand recognition
• Track record of successful acquisitions to expand capabilities and reach
• Healthy profitability, with Segment Adjusted EBITDA margins around 20-25%
• Solid liquidity position and access to capital through credit facilities

Weaknesses:

• Exposure to volatility in the environmental services industry, particularly emergency response projects
• Reliance on acquisitions to drive growth, which can result in significant intangible asset amortization and integration costs
• High financing costs due to leveraged capital structure
• Potential challenges in maintaining organic growth and profitability amid market uncertainties

Conclusion

Onterris’ financial performance in the first half of 2026 was impacted by lower demand for its services, particularly in the Consulting and Treatment segment. However, the company was able to maintain profitability through cost management and operational efficiency improvements.

Looking ahead, Onterris’ ability to navigate the cyclical nature of the environmental services industry, effectively integrate acquisitions, and continue investing in its corporate infrastructure will be critical to its long-term success. The company’s diversified service offerings, strong market position, and access to capital provide a solid foundation for future growth, but it will need to carefully manage its costs and revenue mix to drive sustainable profitability.