MISTRAS Group, Inc. (MG: NYSE), a leading "one source"
multinational provider of integrated technology-enabled asset
protection solutions, reported financial results for its second
quarter and six months ended June 30, 2022.
Highlights of the Second Quarter
2022*
- Revenue of $179.0 million, up
0.8%, up 3.2% excluding the impact of unfavorable foreign currency
exchange**
- SG&A expenses of $40.7
million, up 2.4% but down 3.2% sequentially
- Net income of $4.6 million or
$0.15 per diluted share
- Adjusted EBITDA of $18.3
million
- Operating cash flow of $13.2
million and free cash flow of $9.3 million
Highlights of the First Half
2022
- Revenue of $340.7 million, up
2.8%, up 4.6% excluding the impact of unfavorable foreign currency
exchange**
- Income from operations of $4.9
million
- Interest expense of $4.1
million, down 36.3%
- Gross debt of $200.4 million
and Net debt of $181.8 million
* All comparisons are
consolidated and versus the equivalent prior year period, unless
otherwise noted.** We calculate foreign currency exchange impact by
converting our current period financial results in local currency
using the prior period exchange rates and comparing this amount to
the current period financial results in local currency using the
current period exchange rate.
For the second quarter of 2022, consolidated
revenue was $179.0 million, a 0.8% nominal increase, but up 3.2%
excluding the impact of unfavorable foreign currency exchange.
Second quarter revenue was impacted by project delays in the
Company’s oil & gas business, as customers continue to defer
projects, associated with high refinery utilization rates due to
strong consumer demand. Projects that normally occur in the second
quarter are now anticipated to be performed in the third and fourth
quarters. This is evident in our Services segment which we expect
to approach 2019 revenue levels in the third quarter, driven by the
completion of turnarounds and other projects previously scheduled
for the first and second quarters of the year.
Second quarter 2022 consolidated gross profit was
down slightly compared to the prior year period, with a gross
profit margin decline of 120 basis points. This decline was
primarily due to higher healthcare costs, the lag in price
increases in response to inflationary cost increases and the end of
Canadian wage subsidies that were available during the COVID-19
pandemic and are no longer being provided. These adverse factors
more than offset the positive impact of a favorable sales mix. The
Company anticipates improved gross margin in the second half of
2022, due to increased volumes, a favorable sales mix and reducing
the impact of inflationary pressures on gross margin.
Selling, general and administrative expenses in the
second quarter of 2022 were $40.7 million, up from $39.7 million in
the second quarter of 2021, primarily due to the reversal of
remaining COVID-19 temporary cost reductions in August of 2021,
which were initially implemented in 2020. However, selling, general
and administrative expenses were down 3.2% sequentially from the
first quarter of 2022 and remain below second quarter 2019
pre-pandemic levels.
For the second quarter of 2022, the Company
reported net income of $4.6 million or $0.15 per diluted share.
Chief Executive Officer Dennis Bertolotti
commented, “This was our eighth consecutive quarter of revenue
growth despite delays in the timing of some oil & gas projects
and unfavorable foreign exchange translation. Most of these delays
are expected to shift revenue that had been anticipated to be
earned in the second quarter, into the third and fourth quarters,
effectively reversing our historically seasonal second and third
quarter performance and, ultimately, having little effect on our
full year expectations.”
“We continue to see strengthening market conditions
in the Aerospace and Defense industry which continued in the second
quarter, as our revenue in this end market was the highest it has
been since the onset of the pandemic. We are seeing significant
increases in the commercial aerospace sector which we anticipate
will continue to gain momentum through the remainder of the year.
The expansion and installation of new equipment and capabilities at
our Georgia Aerospace facility is nearly complete, wherein we are
expanding our service offerings that help alleviate our customers’
bottlenecks that have arisen during the pandemic and continue to
exist in the aerospace supply chains. We are also optimistic for
the continuing prospects of the growing private space sector.
Additionally, I am very pleased to have Hon. Jay M. Cohen engaged
with MISTRAS as an Advanced Technical Solutions Consultant. Retired
Rear Admiral Cohen brings an exceptional reputation and over four
decades of expertise in science and technology research, and his
knowledge and network of industry contacts will enable us to
further expand into a robust naval and defense infrastructure
sector.”
“We continue to see expansion in our growth
initiatives as Onstream, our inline inspection business within the
midstream sector, reported its highest ever revenue quarter. We
expect to continue to see this trend continuing into the second
half of 2022, due to increased production levels and the
corresponding transportation and distribution activity, due to high
crude oil prices. Our data solutions businesses, including PCMS and
New Century Software, also had strong quarters as well. The
adoption of OneSuite continues to increase, with over 90 integrated
applications having been installed at nearly 40 different
customers. This continues to prove to us, and our customers, the
versatility and capabilities of OneSuite as it is currently
operating at over 150 sites with close to 900 individual
subscriptions. OneSuite revenue remains on track to double this
year.”
Mr. Bertolotti concluded, “I am looking forward to
the second half of 2022, during which the third quarter could be
one of our strongest Services segment revenue quarters ever, due in
part to the continued rapid growth of our digital solutions service
offerings including OneSuite, and the continued recovery and growth
of our other end markets as we continue to meet and exceed customer
needs. Inflation remains an ongoing challenge, but we are making
progress as we actively engage with our customers, and they begin
to acknowledge the inevitable cost of an inflationary environment.
Our continued focus on improving cost leverage and recovery in
markets with higher than corporate average margins has positioned
us to have robust consolidated profitability for the remainder of
the year. With our recently announced new credit facility, we will
enjoy the flexibility to increase our investment in both organic
growth initiatives and more closely evaluate acquisitions that meet
our strategic objectives. I am very excited about our prospects for
growth in both our existing and new markets in 2022 and
beyond.”
Performance by certain Segments:
Services segment second quarter
revenue was $149.5 million, up 3.1% from $145.0 million in the
prior year quarter. Revenues continue to reflect recovery in the
Energy markets. For the second quarter, gross profit was $43.0
million, compared to $43.8 million in the prior year. Gross profit
margin was 28.7% for the second quarter of 2022, compared to 30.2%
in the second quarter of 2021. This decrease of 150 basis points
was due primarily to higher healthcare costs in the US and the end
of Canadian wage subsidies that were available during the COVID-19
pandemic and are no longer being provided, partially offset by
favorable sales mix.
International segment second
quarter revenues were $29.6 million, down 7.3% from $32.0 million
in the prior year quarter but up 3.7% in local currencies before
translation, which represents organic growth, due to increased
opportunities in a recovering aerospace market, increased nuclear
business, and large projects in the Energy markets. International
segment second quarter gross profit margin was 31.9%, compared to
30.1% in the prior year, a 180-basis point improvement attributable
to favorable sales mix.
Cash Flow and Balance Sheet The
Company’s net cash from operating activities was $7.8 million for
the first six months of 2022, compared to $18.1 million in the
prior year. Free cash flow was $0.7 million for the first six
months of 2022, compared to $7.3 million in the prior year. For the
second quarter of 2022, free cash flow was $9.3 million compared to
$8.5 million in the prior year period, an increase of 9.4%.
The Company’s net debt (total debt less cash and
cash equivalents) was $181.8 million as of June 30, 2022, compared
to $178.5 million as of December 31, 2021. Gross debt decreased by
$8.4 million during the quarter ended June 30, 2022, from $208.8
million as of March 31, 2022, to $200.4 million as of June 30,
2022.
Outlook The Company reaffirms its
previously announced outlook for the full year 2022, that being
revenue between $695 and $715 million, Adjusted EBITDA between $65
and $69 million and free cash flow between $27 and $30 million.
While the second quarter 2022 results were below the Company’s
expectations, it is confident in the level of work expected for the
second half of 2022, given strong energy markets, improving
commercial aerospace demand, robust industrial manufacturing and a
rapidly developing Data Solutions offering.
Conference Call In connection with
this release MISTRAS will hold a conference call on August 4, 2022,
at 10:00 a.m. (Eastern). To listen to the live webcast of the
conference call, visit the Investor Relations section of MISTRAS
Group’s website at www.mistrasgroup.com.
Note there is a new process to participate in the
live question and answer session. Individuals wishing to
participate may preregister at:
https://register.vevent.com/register/BI61289ae154d54459b1036db29c908b0d.
Upon registering, a dial-in number and unique PIN will be provided
to join the conference call.
Following the conference call, an archived webcast
of the call will be available for one year by visiting the Investor
Relations section of MISTRAS Group’s website.
About MISTRAS Group, Inc. - One Source for
Asset Protection Solutions®MISTRAS Group, Inc. (NYSE: MG)
is a leading "one source" multinational provider of integrated
technology-enabled asset protection solutions, helping to maximize
the safety and operational uptime for civilization’s most critical
industrial and civil assets.
Backed by an innovative, data-driven asset
protection portfolio, proprietary technologies, and decades-long
legacy of industry leadership, MISTRAS leads clients in the oil and
gas, aerospace and defense, power generation, civil infrastructure,
and manufacturing industries towards achieving and maintaining
operational excellence. By supporting these organizations that help
fuel our vehicles and power our society; inspecting components that
are trusted for commercial, defense, and space craft; and building
real-time monitoring equipment to enable safe travel across
bridges, MISTRAS helps the world at large.
MISTRAS enhances value for its clients by
integrating asset protection throughout supply chains and
centralizing integrity data through a suite of Industrial
IoT-connected digital software and monitoring solutions. The
company’s core capabilities also include non-destructive testing
(“NDT”) field inspections enhanced by advanced robotics, laboratory
quality control and assurance testing, sensing technologies and NDT
equipment, asset and mechanical integrity engineering services, and
light mechanical maintenance and access services.
For more information about how MISTRAS helps
protect civilization’s critical infrastructure, visit
www.mistrasgroup.com or contact Nestor S. Makarigakis, Group
Vice President of Marketing at marcom@mistrasgroup.com.
Forward-Looking and Cautionary
StatementsCertain statements made in this press release
are "forward-looking statements" about MISTRAS' financial results
and estimates, products and services, business model, strategy,
growth opportunities, profitability and competitive position, and
other matters. These forward-looking statements generally use words
such as "future," "possible," "potential," "targeted,"
"anticipate," "believe," "estimate," "expect," "intend," "plan,"
"predict," "project," "will," "may," "should," "could," "would" and
other similar words and phrases. Such statements are not guarantees
of future performance or results, and will not necessarily be
accurate indications of the times at, or by which, such performance
or results will be achieved, if at all. These statements are
subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in
these statements. A list, description and discussion of these and
other risks and uncertainties can be found in the "Risk Factors"
section of the Company's 2021 Annual Report on Form 10-K dated
March 14, 2022, as updated by our reports on Form 10-Q and Form
8-K. The forward-looking statements are made as of the date hereof,
and MISTRAS undertakes no obligation to update such statements as a
result of new information, future events or otherwise.
Use of Non-GAAP MeasuresIn
addition to financial information prepared in accordance with
generally accepted accounting principles in the U.S. (GAAP), this
press release also contains adjusted financial measures that we
believe provide investors and management with supplemental
information relating to operating performance and trends that
facilitate comparisons between periods and with respect to
projected information. The term "Adjusted EBITDA" used in this
release is a financial measurement not calculated in accordance
with GAAP and is defined as net income attributable to MISTRAS
Group, Inc. plus: interest expense, provision for income taxes,
depreciation and amortization, share-based compensation expense and
certain acquisition related costs (including transaction due
diligence costs and adjustments to the fair value of contingent
consideration), foreign exchange (gain) loss, non-cash impairment
charges and, if applicable, certain additional special items which
are noted. A reconciliation of Adjusted EBITDA to a financial
measurement under GAAP is set forth in a table attached to this
press release. The Company also uses the term “net debt”, a
non-GAAP measurement defined as the sum of the current and
long-term portions of long-term debt, less cash and cash
equivalents and the term “free cash flow”, a non-GAAP measurement
the Company defines as cash provided by operating activities less
capital expenditures (which is classified as an investing
activity). A reconciliation of these non-GAAP financial measurement
to GAAP are also set forth in tables attached to this press
release. In the tables attached is also a table reconciling
“Segment and Total Company Income (Loss) from operations (GAAP) to
Income (Loss) before special items (non-GAAP), “Net Income (Loss)
(GAAP)" to "Net Income (Loss) Excluding Special Items (non-GAAP)”,
and “Diluted EPS (GAAP)” to “Diluted EPS Excluding Special Items
(non-GAAP)” which reconciles the non-GAAP amount to a GAAP
measurement.
Mistras Group, Inc. and
SubsidiariesCondensed Consolidated Balance
Sheets(in thousands, except share and per share data)
|
June 30, 2022 |
|
December 31, 2021 |
ASSETS |
(unaudited) |
|
|
Current Assets |
|
|
|
Cash and cash equivalents |
$ |
18,609 |
|
|
$ |
24,110 |
|
Accounts receivable, net |
|
129,572 |
|
|
|
109,511 |
|
Inventories |
|
12,967 |
|
|
|
12,686 |
|
Prepaid expenses and other current assets |
|
11,768 |
|
|
|
15,031 |
|
Total current assets |
|
172,916 |
|
|
|
161,338 |
|
Property, plant and equipment, net |
|
80,585 |
|
|
|
86,578 |
|
Intangible assets, net |
|
54,278 |
|
|
|
59,381 |
|
Goodwill |
|
203,106 |
|
|
|
205,439 |
|
Deferred income taxes |
|
1,232 |
|
|
|
2,174 |
|
Other assets |
|
43,425 |
|
|
|
47,285 |
|
Total assets |
$ |
555,542 |
|
|
$ |
562,195 |
|
LIABILITIES AND EQUITY |
|
|
|
Current Liabilities |
|
|
|
Accounts payable |
$ |
17,328 |
|
|
$ |
12,870 |
|
Accrued expenses and other current liabilities |
|
84,835 |
|
|
|
83,863 |
|
Current portion of long-term debt |
|
21,227 |
|
|
|
20,162 |
|
Current portion of finance lease obligations |
|
3,844 |
|
|
|
3,765 |
|
Income taxes payable |
|
148 |
|
|
|
755 |
|
Total current liabilities |
|
127,382 |
|
|
|
121,415 |
|
Long-term debt, net of current portion |
|
179,162 |
|
|
|
182,403 |
|
Obligations under finance leases, net of current portion |
|
9,444 |
|
|
|
9,752 |
|
Deferred income taxes |
|
8,566 |
|
|
|
8,385 |
|
Other long-term liabilities |
|
36,727 |
|
|
|
39,328 |
|
Total liabilities |
|
361,281 |
|
|
|
361,283 |
|
Equity |
|
|
|
Preferred stock, 10,000,000 shares authorized |
|
— |
|
|
|
— |
|
Common stock, $0.01 par value, 200,000,000 shares authorized,
29,807,038 and 29,546,263 shares issued and outstanding |
|
297 |
|
|
|
295 |
|
Additional paid-in capital |
|
240,697 |
|
|
|
238,687 |
|
Accumulated deficit |
|
(18,708 |
) |
|
|
(17,988 |
) |
Accumulated other comprehensive loss |
|
(28,287 |
) |
|
|
(20,311 |
) |
Total Mistras Group, Inc. stockholders’ equity |
|
193,999 |
|
|
|
200,683 |
|
Non-controlling interests |
|
262 |
|
|
|
229 |
|
Total equity |
|
194,261 |
|
|
|
200,912 |
|
Total liabilities and equity |
$ |
555,542 |
|
|
$ |
562,195 |
|
Mistras Group, Inc. and
SubsidiariesUnaudited Condensed Consolidated
Statements of Income (Loss)(in thousands, except per share
data)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Revenue |
$ |
179,031 |
|
|
$ |
177,677 |
|
$ |
340,693 |
|
|
$ |
331,412 |
|
Cost of revenue |
|
119,980 |
|
|
|
116,787 |
|
|
235,738 |
|
|
|
225,030 |
|
Depreciation |
|
5,493 |
|
|
|
5,554 |
|
|
11,505 |
|
|
|
11,045 |
|
Gross profit |
|
53,558 |
|
|
|
55,336 |
|
|
93,450 |
|
|
|
95,337 |
|
Selling, general and administrative expenses |
|
40,676 |
|
|
|
39,719 |
|
|
82,712 |
|
|
|
79,358 |
|
Bad debt provision for troubled customers, net of recoveries |
|
289 |
|
|
|
— |
|
|
289 |
|
|
|
— |
|
Legal settlement and insurance recoveries, net |
|
(153 |
) |
|
|
— |
|
|
(994 |
) |
|
|
1,030 |
|
Research and engineering |
|
522 |
|
|
|
620 |
|
|
1,073 |
|
|
|
1,347 |
|
Depreciation and amortization |
|
2,635 |
|
|
|
3,078 |
|
|
5,430 |
|
|
|
6,152 |
|
Acquisition-related expense, net |
|
13 |
|
|
|
545 |
|
|
63 |
|
|
|
822 |
|
Income from operations |
|
9,576 |
|
|
|
11,374 |
|
|
4,877 |
|
|
|
6,628 |
|
Interest expense |
|
2,117 |
|
|
|
3,155 |
|
|
4,055 |
|
|
|
6,368 |
|
Income before provision (benefit) for income
taxes |
|
7,459 |
|
|
|
8,219 |
|
|
822 |
|
|
|
260 |
|
Provision (benefit) for income taxes |
|
2,793 |
|
|
|
2,274 |
|
|
1,509 |
|
|
|
(326 |
) |
Net Income (Loss) |
|
4,666 |
|
|
|
5,945 |
|
|
(687 |
) |
|
|
586 |
|
Less: net income attributable to noncontrolling interests, net of
taxes |
|
23 |
|
|
|
8 |
|
|
33 |
|
|
|
11 |
|
Net Income (Loss) attributable to Mistras
Group, Inc. |
$ |
4,643 |
|
|
$ |
5,937 |
|
$ |
(720 |
) |
|
$ |
575 |
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share: |
|
|
|
|
|
|
|
Basic |
$ |
0.15 |
|
|
$ |
0.20 |
|
$ |
(0.02 |
) |
|
$ |
0.02 |
|
Diluted |
$ |
0.15 |
|
|
$ |
0.20 |
|
$ |
(0.02 |
) |
|
$ |
0.02 |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
29,957 |
|
|
|
29,602 |
|
|
29,840 |
|
|
|
29,514 |
|
Diluted |
|
30,233 |
|
|
|
30,136 |
|
|
29,840 |
|
|
|
30,039 |
|
Mistras Group, Inc. and
SubsidiariesUnaudited Operating Data by
Segment(in thousands)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenues |
|
|
|
|
|
|
|
Services |
$ |
149,528 |
|
|
$ |
144,977 |
|
|
$ |
282,474 |
|
|
$ |
269,275 |
|
International |
|
29,610 |
|
|
|
31,951 |
|
|
|
57,748 |
|
|
|
59,599 |
|
Products and Systems |
|
2,652 |
|
|
|
3,203 |
|
|
|
5,588 |
|
|
|
6,191 |
|
Corporate and eliminations |
|
(2,759 |
) |
|
|
(2,454 |
) |
|
|
(5,117 |
) |
|
|
(3,653 |
) |
|
$ |
179,031 |
|
|
$ |
177,677 |
|
|
$ |
340,693 |
|
|
$ |
331,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Gross profit |
|
|
|
|
|
|
|
Services |
$ |
42,954 |
|
|
$ |
43,761 |
|
|
$ |
73,479 |
|
|
$ |
74,837 |
|
International |
|
9,440 |
|
|
|
9,615 |
|
|
|
17,630 |
|
|
|
17,240 |
|
Products and Systems |
|
1,157 |
|
|
|
1,952 |
|
|
|
2,325 |
|
|
|
3,233 |
|
Corporate and eliminations |
|
7 |
|
|
|
8 |
|
|
|
16 |
|
|
|
27 |
|
|
$ |
53,558 |
|
|
$ |
55,336 |
|
|
$ |
93,450 |
|
|
$ |
95,337 |
|
Mistras Group, Inc. and
SubsidiariesUnaudited Revenues by
Category(in thousands)
Revenue by industry was as follows:
Three Months Ended June 30, 2022 |
Services |
|
International |
|
Products |
|
Corp/Elim |
|
Total |
Oil & Gas |
$ |
93,098 |
|
$ |
8,028 |
|
$ |
139 |
|
$ |
— |
|
|
$ |
101,265 |
Aerospace & Defense |
|
17,300 |
|
|
5,118 |
|
|
26 |
|
|
— |
|
|
|
22,444 |
Industrials |
|
9,794 |
|
|
6,506 |
|
|
333 |
|
|
— |
|
|
|
16,633 |
Power generation & Transmission |
|
8,378 |
|
|
1,997 |
|
|
678 |
|
|
— |
|
|
|
11,053 |
Other Process Industries |
|
11,641 |
|
|
3,754 |
|
|
14 |
|
|
— |
|
|
|
15,409 |
Infrastructure, Research & Engineering |
|
3,183 |
|
|
2,193 |
|
|
442 |
|
|
— |
|
|
|
5,818 |
Petrochemical |
|
3,584 |
|
|
55 |
|
|
— |
|
|
— |
|
|
|
3,639 |
Other |
|
2,550 |
|
|
1,959 |
|
|
1,020 |
|
|
(2,759 |
) |
|
|
2,770 |
Total |
$ |
149,528 |
|
$ |
29,610 |
|
$ |
2,652 |
|
$ |
(2,759 |
) |
|
$ |
179,031 |
Three Months Ended June 30, 2021 |
Services |
|
International |
|
Products |
|
Corp/Elim |
|
Total |
Oil & Gas |
$ |
85,831 |
|
$ |
9,533 |
|
$ |
212 |
|
$ |
— |
|
|
$ |
95,576 |
Aerospace & Defense |
|
12,779 |
|
|
4,127 |
|
|
29 |
|
|
— |
|
|
|
16,935 |
Industrials |
|
11,242 |
|
|
6,194 |
|
|
418 |
|
|
— |
|
|
|
17,854 |
Power generation & Transmission |
|
10,073 |
|
|
3,183 |
|
|
830 |
|
|
— |
|
|
|
14,086 |
Other Process Industries |
|
10,356 |
|
|
3,627 |
|
|
35 |
|
|
— |
|
|
|
14,018 |
Infrastructure, Research & Engineering |
|
5,174 |
|
|
3,254 |
|
|
825 |
|
|
— |
|
|
|
9,253 |
Petrochemical |
|
5,936 |
|
|
47 |
|
|
— |
|
|
— |
|
|
|
5,983 |
Other |
|
3,586 |
|
|
1,986 |
|
|
854 |
|
|
(2,454 |
) |
|
|
3,972 |
Total |
$ |
144,977 |
|
$ |
31,951 |
|
$ |
3,203 |
|
$ |
(2,454 |
) |
|
$ |
177,677 |
Six Months Ended June 30, 2022 |
Services |
|
International |
|
Products |
|
Corp/Elim |
|
Total |
Oil & Gas |
$ |
179,711 |
|
$ |
15,600 |
|
$ |
177 |
|
$ |
— |
|
|
$ |
195,488 |
Aerospace & Defense |
|
32,322 |
|
|
10,058 |
|
|
134 |
|
|
— |
|
|
|
42,514 |
Industrials |
|
18,801 |
|
|
12,034 |
|
|
835 |
|
|
— |
|
|
|
31,670 |
Power generation & Transmission |
|
12,200 |
|
|
4,559 |
|
|
1,523 |
|
|
— |
|
|
|
18,282 |
Other Process Industries |
|
21,934 |
|
|
7,272 |
|
|
15 |
|
|
— |
|
|
|
29,221 |
Infrastructure, Research & Engineering |
|
5,689 |
|
|
4,232 |
|
|
1,339 |
|
|
— |
|
|
|
11,260 |
Petrochemical |
|
6,629 |
|
|
133 |
|
|
— |
|
|
— |
|
|
|
6,762 |
Other |
|
5,188 |
|
|
3,860 |
|
|
1,565 |
|
|
(5,117 |
) |
|
|
5,496 |
Total |
$ |
282,474 |
|
$ |
57,748 |
|
$ |
5,588 |
|
$ |
(5,117 |
) |
|
$ |
340,693 |
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2021 |
Services |
|
International |
|
Products |
|
Corp/Elim |
|
Total |
Oil & Gas |
$ |
165,051 |
|
$ |
17,469 |
|
$ |
268 |
|
$ |
— |
|
|
$ |
182,788 |
Aerospace & Defense |
|
24,602 |
|
|
8,444 |
|
|
64 |
|
|
— |
|
|
|
33,110 |
Industrials |
|
20,061 |
|
|
11,043 |
|
|
745 |
|
|
— |
|
|
|
31,849 |
Power generation & Transmission |
|
15,607 |
|
|
5,161 |
|
|
1,589 |
|
|
— |
|
|
|
22,357 |
Other Process Industries |
|
18,212 |
|
|
6,539 |
|
|
44 |
|
|
— |
|
|
|
24,795 |
Infrastructure, Research & Engineering |
|
8,343 |
|
|
7,010 |
|
|
1,969 |
|
|
— |
|
|
|
17,322 |
Petrochemical |
|
11,400 |
|
|
119 |
|
|
— |
|
|
— |
|
|
|
11,519 |
Other |
|
5,999 |
|
|
3,814 |
|
|
1,512 |
|
|
(3,653 |
) |
|
|
7,672 |
Total |
$ |
269,275 |
|
$ |
59,599 |
|
$ |
6,191 |
|
$ |
(3,653 |
) |
|
$ |
331,412 |
Revenue by Oil & Gas Sub-category was as
follows:
|
Three months ended June 30, |
|
Six months ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Oil and Gas Revenue by sub-category |
|
|
|
|
|
|
|
Upstream |
$ |
39,443 |
|
$ |
36,205 |
|
$ |
81,108 |
|
$ |
70,131 |
Midstream |
|
32,949 |
|
|
29,797 |
|
|
57,856 |
|
|
52,235 |
Downstream |
|
28,873 |
|
|
29,574 |
|
|
56,524 |
|
|
60,422 |
Total |
$ |
101,265 |
|
$ |
95,576 |
|
$ |
195,488 |
|
$ |
182,788 |
Mistras Group, Inc. and
SubsidiariesUnaudited Reconciliation
ofSegment and Total Company Income (Loss) from
Operations (GAAP) to Income before Special Items
(non-GAAP)(in thousands)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Services: |
|
|
|
|
|
|
|
Income from operations (GAAP) |
$ |
14,855 |
|
|
$ |
18,358 |
|
|
$ |
18,615 |
|
|
$ |
22,906 |
|
Bad debt provision for troubled customers, net of recoveries |
|
289 |
|
|
|
— |
|
|
|
289 |
|
|
|
— |
|
Reorganization and other costs |
|
1 |
|
|
|
26 |
|
|
|
28 |
|
|
|
97 |
|
Legal settlement and insurance recoveries, net |
|
— |
|
|
|
— |
|
|
|
(841 |
) |
|
|
1,650 |
|
Acquisition-related expense, net |
|
— |
|
|
|
545 |
|
|
|
45 |
|
|
|
788 |
|
Income from operations before special items (non-GAAP) |
$ |
15,145 |
|
|
$ |
18,929 |
|
|
$ |
18,136 |
|
|
$ |
25,441 |
|
International: |
|
|
|
|
|
|
|
Income from operations (GAAP) |
$ |
1,580 |
|
|
$ |
1,809 |
|
|
$ |
1,864 |
|
|
$ |
989 |
|
Reorganization and other costs |
|
(187 |
) |
|
|
30 |
|
|
|
(99 |
) |
|
|
126 |
|
Income from operations before special items (non-GAAP) |
$ |
1,393 |
|
|
$ |
1,839 |
|
|
$ |
1,765 |
|
|
$ |
1,115 |
|
Products and Systems: |
|
|
|
|
|
|
|
Income (loss) from operations (GAAP) |
$ |
(420 |
) |
|
$ |
209 |
|
|
$ |
(1,002 |
) |
|
$ |
(372 |
) |
Reorganization and other costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
27 |
|
Income (loss) from operations (GAAP) |
$ |
(420 |
) |
|
$ |
209 |
|
|
$ |
(1,002 |
) |
|
$ |
(345 |
) |
Corporate and Eliminations: |
|
|
|
|
|
|
|
Loss from operations (GAAP) |
$ |
(6,439 |
) |
|
$ |
(9,002 |
) |
|
$ |
(14,600 |
) |
|
$ |
(16,895 |
) |
Loss on debt modification |
|
— |
|
|
|
277 |
|
|
|
— |
|
|
|
277 |
|
Legal settlement and insurance recoveries, net |
|
(153 |
) |
|
|
— |
|
|
|
(153 |
) |
|
|
(620 |
) |
Reorganization and other costs |
|
6 |
|
|
|
— |
|
|
|
6 |
|
|
|
— |
|
Acquisition-related expense, net |
|
13 |
|
|
|
— |
|
|
|
18 |
|
|
|
34 |
|
Loss from operations before special items (non-GAAP) |
$ |
(6,573 |
) |
|
$ |
(8,725 |
) |
|
$ |
(14,729 |
) |
|
$ |
(17,204 |
) |
Total Company: |
|
|
|
|
|
|
|
Income from operations (GAAP) |
$ |
9,576 |
|
|
$ |
11,374 |
|
|
$ |
4,877 |
|
|
$ |
6,628 |
|
Bad debt provision for troubled customers, net of recoveries |
|
289 |
|
|
|
— |
|
|
|
289 |
|
|
|
— |
|
Reorganization and other costs |
|
(180 |
) |
|
|
56 |
|
|
|
(65 |
) |
|
|
250 |
|
Loss on debt modification |
|
— |
|
|
|
277 |
|
|
|
— |
|
|
|
277 |
|
Legal settlement and insurance recoveries, net |
|
(153 |
) |
|
|
— |
|
|
|
(994 |
) |
|
|
1,030 |
|
Acquisition-related expense, net |
|
13 |
|
|
|
545 |
|
|
|
63 |
|
|
|
822 |
|
Income from operations before special items (non-GAAP) |
$ |
9,545 |
|
|
$ |
12,252 |
|
|
$ |
4,170 |
|
|
$ |
9,007 |
|
Mistras Group, Inc. and
SubsidiariesUnaudited Summary Cash Flow
Information(in thousands)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net cash provided by (used in): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
$ |
13,208 |
|
|
$ |
14,978 |
|
|
$ |
7,809 |
|
|
$ |
18,126 |
|
Investing activities |
|
(3,762 |
) |
|
|
(6,142 |
) |
|
|
(6,499 |
) |
|
|
(10,318 |
) |
Financing activities |
|
(9,379 |
) |
|
|
(13,405 |
) |
|
|
(5,056 |
) |
|
|
(12,970 |
) |
Effect of exchange rate changes on cash |
|
(1,379 |
) |
|
|
334 |
|
|
|
(1,755 |
) |
|
|
(656 |
) |
Net change in cash and cash equivalents |
$ |
(1,312 |
) |
|
$ |
(4,235 |
) |
|
$ |
(5,501 |
) |
|
$ |
(5,818 |
) |
Mistras Group, Inc. and
SubsidiariesUnaudited Reconciliation of
Net Cash Provided by Operating Activities (GAAP) to Free
Cash Flow (non-GAAP)(in thousands)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
(GAAP) |
$ |
13,208 |
|
|
$ |
14,978 |
|
|
$ |
7,809 |
|
|
$ |
18,126 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
(3,631 |
) |
|
|
(6,185 |
) |
|
|
(6,692 |
) |
|
|
(10,188 |
) |
Purchases of intangible assets |
|
(248 |
) |
|
|
(268 |
) |
|
|
(399 |
) |
|
|
(618 |
) |
Free cash flow (non-GAAP) |
$ |
9,329 |
|
|
$ |
8,525 |
|
|
$ |
718 |
|
|
$ |
7,320 |
|
Mistras Group, Inc. and
SubsidiariesUnaudited Reconciliation of
Gross Debt (GAAP) to Net Debt (non-GAAP)(in
thousands)
|
June 30, 2022 |
|
December 31, 2021 |
|
|
|
|
Current portion of long-term debt |
$ |
21,227 |
|
|
$ |
20,162 |
|
Long-term debt, net of current portion |
|
179,162 |
|
|
|
182,403 |
|
Total Gross Debt (GAAP) |
|
200,389 |
|
|
|
202,565 |
|
Less: Cash and cash equivalents |
|
(18,609 |
) |
|
|
(24,110 |
) |
Total Net Debt (non-GAAP) |
$ |
181,780 |
|
|
$ |
178,455 |
|
Mistras Group, Inc. and
SubsidiariesUnaudited Reconciliation of
Net Income (Loss) (GAAP) to Adjusted EBITDA
(non-GAAP)(in thousands)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
Net Income (loss) (GAAP) |
$ |
4,666 |
|
|
$ |
5,945 |
|
$ |
(687 |
) |
|
$ |
586 |
|
Less: Net income attributable to non-controlling interests, net of
taxes |
|
23 |
|
|
|
8 |
|
|
33 |
|
|
|
11 |
|
Net Income (loss) attributable to Mistras
Group, Inc. |
$ |
4,643 |
|
|
$ |
5,937 |
|
$ |
(720 |
) |
|
$ |
575 |
|
Interest expense |
|
2,117 |
|
|
|
3,155 |
|
|
4,055 |
|
|
|
6,368 |
|
Provision (benefit) for income taxes |
|
2,793 |
|
|
|
2,274 |
|
|
1,509 |
|
|
|
(326 |
) |
Depreciation and amortization |
|
8,128 |
|
|
|
8,632 |
|
|
16,935 |
|
|
|
17,197 |
|
Share-based compensation expense |
|
1,255 |
|
|
|
1,202 |
|
|
2,770 |
|
|
|
2,464 |
|
Acquisition-related expense |
|
13 |
|
|
|
545 |
|
|
63 |
|
|
|
822 |
|
Reorganization and other related costs (benefit), net |
|
(180 |
) |
|
|
56 |
|
|
(65 |
) |
|
|
250 |
|
Legal settlement and insurance recoveries, net |
|
(153 |
) |
|
|
— |
|
|
(994 |
) |
|
|
1,030 |
|
Loss on debt modification |
|
— |
|
|
|
277 |
|
|
— |
|
|
|
277 |
|
Bad debt provision for troubled customers, net of recoveries |
|
289 |
|
|
|
— |
|
|
289 |
|
|
|
— |
|
Foreign exchange (gain) loss |
|
(597 |
) |
|
|
474 |
|
|
4 |
|
|
|
932 |
|
Adjusted EBITDA (non-GAAP) |
$ |
18,308 |
|
|
$ |
22,552 |
|
$ |
23,846 |
|
|
$ |
29,589 |
|
Mistras Group, Inc. and
SubsidiariesUnaudited Reconciliation
ofNet Income (Loss) (GAAP) and Diluted EPS (GAAP)
to Net Income (Loss) Excluding Special Items (non-GAAP)
and Diluted EPS Excluding Special Items
(non-GAAP)(dollars in thousands, except per share
data)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income (loss) attributable to Mistras Group, Inc.
(GAAP) |
$ |
4,643 |
|
|
$ |
5,937 |
|
|
$ |
(720 |
) |
|
$ |
575 |
|
Special items |
|
(31 |
) |
|
|
878 |
|
|
|
(707 |
) |
|
|
2,379 |
|
Tax impact on special items |
|
24 |
|
|
|
(189 |
) |
|
|
180 |
|
|
|
(557 |
) |
Special items, net of tax |
$ |
(7 |
) |
|
$ |
689 |
|
|
$ |
(527 |
) |
|
$ |
1,822 |
|
Net income (loss) attributable to Mistras Group, Inc.
Excluding Special Items (non-GAAP) |
$ |
4,636 |
|
|
$ |
6,626 |
|
|
$ |
(1,247 |
) |
|
$ |
2,397 |
|
|
|
|
|
|
|
|
|
Diluted EPS (GAAP)(1) |
$ |
0.15 |
|
|
$ |
0.20 |
|
|
$ |
(0.02 |
) |
|
$ |
0.02 |
|
Special items, net of tax |
|
0.00 |
|
|
|
0.02 |
|
|
|
(0.02 |
) |
|
|
0.06 |
|
Diluted EPS Excluding Special Items
(non-GAAP) |
$ |
0.15 |
|
|
$ |
0.22 |
|
|
$ |
(0.04 |
) |
|
$ |
0.08 |
|
_______________(1) For the six months ended June
30, 2022, 1,412,073 shares related to restricted stock were
excluded from the calculation of diluted EPS due to the net loss
for the period.
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