Infrastructure safety specialist Mistras Group Inc.'s (MG) initial public offering teetered toward stability Thursday morning after a poor opening.

The company's stock opened at $12.30 a share on the New York Stock Exchange, down 1.6% from its IPO price of $12.50, but then quickly rebounded, trading recently at $12.60, up 10 cents. A total of 8.7 million shares were sold at a price below its expected $14-to-$16 price range.

The company focuses on assessing the safety of large infrastructure, from nuclear power plants to food-processing equipment. Its clients span a range of industries, from energy companies such as BP PLC (BP, BP.LN) to engine makers like Rolls-Royce Group PLC (RYCEY, RR.LN); it also tests the safety of public infrastructure, such as bridges, for federal, state and local governments.

It's a growing industry, thanks to increased outsourcing, more refined testing procedures and the publicity surrounding major infrastructure failures, such as the rush-hour collapse of a bridge in Minneapolis in 2007.

Mistras plans to expand into new markets, including wind turbines, other alternative energy, and natural gas transportation, as well as in public infrastructure, including highways and bridges.

The company, which ends its fiscal year May 31, has demonstrated fast annual revenue growth, increasing 37% to $209 million in 2009. But its operating income declined 9% due to a legal settlement with former workers claiming California labor code violations, and an increase in allowances for doubtful accounts after a large customer filed for bankruptcy.

The lower operating income, combined with higher interest expense from increased borrowing the company undertook for acquisitions it made and equipment purchases, dragged net income down 27% to $5.5 million compared to fiscal 2008.

Mistras estimates that revenue in its first quarter of fiscal 2010 will increase between 16% and 22% from $47 million a year earlier, but its operating income will decline to $2 million to $3 million, compared to $3.7 million in the year-earlier period. The company said the expected decline in operating income would occur due to a lower-margin revenue mix as a result of the economic downturn, a shift that is expected to continue in the near term.

The company, of Princeton Junction, N.J., was founded by a group of former AT&T Bell Labs researchers in 1978, and operated as Physical Acoustics Corp. until it reorganized into Mistras in 1994.

Of the total shares sold, 2 million came from private owners and won't benefit the company; sellers include Chairman and Chief Executive Sotirios J. Vahaviolos; several other executives; and private equity funds affiliated with Altus Capital Partners Inc. and Thayer Hidden Creek.

The company plans to use its proceeds for working capital and possible acquisitions and to pay down some debt. The debt it pays off will also benefit its underwriters; two of them, JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC), are party to the credit agreement it plans to pay off completely.

Besides JPMorgan Chase and Bank of America Merrill Lynch, Mistras' deal was managed by Credit Suisse Group (CS).

Also expected to trade Thursday are shares of pharmaceutical company Omeros Corp. Its stock will trade on the Nasdaq under the symbol OMER.

- By Lynn Cowan, Dow Jones Newswires; 301-270-0323; lynn.cowan@dowjones.com