MISTRAS Group, Inc. (NYSE:MG) Q2 2021 Results Earnings Conference Call August 3, 2021 9:00 AM ET Company Participants Dennis Bertolotti - President and Chief Executive Officer Edward Prajzner - Executive Vice President, Chief Financial Officer and Treasurer Jonathan Wolk - Senior Executive Vice President and Chief Operating Officer Conference Call Participants David Ridley-Lane - Bank of America Merrill Lynch Alex Dwyer - KeyBanc Capital Markets Brian Russo - Sidoti & Company Mitchell Pinheiro - Sturdivant ...

Washington, D.C. 20549 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __ to __ Commission file number 001-34481 Mistras Group, Inc. (Exact name of registrant as specified in its charter) Indicate by check mark w ...

Financial Data and Key Metrics Changes - The company reported a net loss of $5.4 million for Q1 2021, while adjusted EBITDA increased by over 30% to $7 million compared to the prior year [21][29] - Gross profit margin improved by 50 basis points due to operational efficiencies and favorable sales mix, with expectations for further expansion throughout 2021 [6][20] - Operating cash flow was $3.1 million for the first quarter, with free cash flow being negative $1.2 million, which is typical for the seasonally weakest period of the year [21][22] Business Line Data and Key Metrics Changes - The Services segment grew operating income to $4.5 million for Q1 2021, with non-GAAP operating income increasing by 55.6% to $6.5 million compared to the previous year [24] - Energy market revenues remained stable, with modest increases in oil and gas and power generation compared to the previous year [10][25] - Commercial aerospace and industrial/manufacturing markets experienced weakness, but the company is optimistic about recovery in these sectors [11][25] Market Data and Key Metrics Changes - The energy sector continues to present attractive opportunities, with billable hours in North America down less than 4% year-over-year, but showing significant recovery in April 2021 [10][25] - The commercial aerospace market remains constrained, with expectations for recovery in the U.S. and Canada by mid-2022, while Europe may lag behind [41][42] - The alternative energy market is viewed as a significant growth opportunity, with ongoing inspections of wind blades and turbine hubs [12][30] Company Strategy and Development Direction - The company is focused on expanding its digital technology offerings, including the introduction of Project CAPA, a cloud-based subscription suite aimed at enhancing asset integrity data management [13][15] - There is a commitment to diversifying end markets and improving service value, with ongoing investments in sales, marketing, and innovative product development [16][17] - The company aims to achieve a funded debt leverage ratio of under 3x by the end of 2022, reflecting a disciplined approach to financial management [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a significant improvement in full-year results, anticipating annual revenue for 2021 to be higher than in 2020 [28][29] - The ongoing COVID-19 pandemic continues to impact operations, but the company expects a strong rebound in the energy market and improved performance in aerospace and alternative energy sectors [31][32] - The company is adapting to market changes and positioning itself as a nimble provider capable of meeting evolving customer needs [31] Other Important Information - The company maintained compliance with all debt covenants as of March 31, 2021, with a funded debt leverage ratio of 4.7x [23] - The spring turnaround season started later than usual, impacting first-quarter performance but expected to extend into the second quarter [5][10] Q&A Session Summary Question: Impact of severe weather in the Gulf - Management acknowledged that severe weather did affect operations, resulting in a few million dollars of lost revenue, but much of the work was deferred rather than canceled [38][39] Question: Recovery expectations for commercial aerospace and industrial markets - Management indicated a faster recovery in the U.S. and Canada, with expectations for improvement in mid-2022, while Europe may lag [41][42] Question: Progress on alternative energy and wind market opportunities - Management reported successful trials in sensor beta testing for wind blades, with commercial discussions expected in the second half of the year [50][51] Question: Long-term gross margin targets - Management expressed a goal to maintain gross margins in the 30% range, focusing on productivity and efficiency gains [58] Question: Services provided in the private space sector - Management explained that services involve consolidating supply chain steps, including inspections and project management, to enhance efficiency [60][61]

Revenue Performance - Revenue for the three months ended March 31, 2021, was $153.7 million, a decrease of $5.7 million, or 3.6%, compared to the same period in 2020[159] - Revenue from the Services segment decreased by 3.6% to $124.3 million, while the International segment revenue decreased by 4.9% to $27.6 million[160] - Products and Systems segment revenue increased by 6.2% to $3.0 million, driven by organic growth[161] - Oil and gas customer revenue comprised approximately 60% of total revenue for the three months ended March 31, 2021, compared to 58% in 2020[162] Profitability - Gross profit for the same period was $40.0 million, representing a gross profit margin of 26.0%, compared to 25.5% in 2020[158] - Gross profit for the three months ended March 31, 2021, was $40.0 million, a decrease from $40.6 million in 2020, with a gross profit margin of 26.0% compared to 25.5% in the prior year[165] - The Products and Systems segment saw a significant increase in gross margin to 42.9%, up 2,980 basis points from 13.1% in 2020, attributed to a favorable sales mix[166] Operational Loss - Loss from operations was $4.7 million, or (3.1)% of revenue, significantly improved from a loss of $111.2 million, or (69.8)% of revenue, in the prior year[158] - The loss from operations (GAAP) decreased by $106.5 million, or 96%, compared to the same period in 2020, while the loss before special items (non-GAAP) decreased by $2.5 million, or 43%[171] Cash Position - The Company maintained a strong cash position with a cash balance of approximately $24.2 million as of March 31, 2021[153] - As of March 31, 2021, the company had cash and cash equivalents of $24.2 million and available borrowing capacity of $45.6 million under its Credit Agreement[184] - Cash provided by operating activities was $3.1 million, a decrease of $3.0 million, or 48%, year-on-year, mainly due to movements in working capital[179] - The company reported a net change in cash and cash equivalents of $(1.6) million for the three months ended March 31, 2021, compared to an increase of $2.0 million in 2020[177] Cost Management - The Company has implemented a temporary cost reduction and efficiency program in response to the economic downturn[153] - Operating expenses decreased by $107.1 million, or 71%, primarily due to the absence of impairment charges, which were $106.1 million in 2020[168] Market Conditions - The impact of COVID-19 has disrupted project timing and purchases, contributing to revenue declines across most segments[161] - The Company continues to monitor market conditions and adapt strategies in light of ongoing economic uncertainties, including oil price volatility and climate change initiatives[155] Interest and Tax - Interest expense increased to approximately $3.2 million for the three months ended March 31, 2021, compared to $2.8 million in 2020, due to higher interest rates on long-term debt[172] - The effective income tax rate was approximately 32.7% for the three months ended March 31, 2021, compared to 13.6% in 2020, influenced by the capitalization of certain non-US intercompany balances[173] Compliance - The company remains in compliance with the terms of its Credit Agreement and will continue to monitor compliance with the covenants[185]

Mistras Group, Inc. (NYSE:MG) Q4 2020 Earnings Conference Call March 17, 2021 9:00 AM ET Company Participants Dennis Bertolotti ??? President and Chief Executive Officer Ed Prajzner ??? Executive Vice President, Chief Financial Officer and Treasurer Jon Wolk ??? Senior Executive Vice President and Chief Operating Officer Conference Call Participants Sean Eastman ??? KeyBanc Capital Markets Brian Russo ??? Sidoti Mitch Pinheiro ??? Sturdivant & Company Operator Ladies and gentlemen, thank you for joining Mis ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission File Number 001-34481 Mistras Group, Inc. (Exact name of registrant as specified in its charter) Delaware 22-3341267 (State or other jurisdiction of inc ...

Mistras Group, Inc. (NYSE:MG) Q3 2020 Earnings Conference Call November 5, 2020 9:00 AM ET Company Participants Dennis Bertolotti ??? President and Chief Executive Officer Ed Prajzner ??? Executive Vice President, Chief Financial Officer and Treasurer Jon Wolk ??? Senior Executive Vice President and Chief Operating Officer Conference Call Participants Alex Dwyer ??? KeyBanc Capital Markets Tate Sullivan ??? Maxim Group Mitch Pinheiro ??? Sturdivant David Ridley-Lane ??? BofA Brian Russo ??? Sidoti Operator ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __ to __ | Delaware | 22-3341267 | | --- | --- | | (State or other jurisdiction of | (I.R.S. Employer | | incorporation or organization) ...

Financial Data and Key Metrics Changes - Second quarter revenue decreased by 38% compared to the same quarter last year, coming in at slightly under $125 million [15][5] - Gross margin improved to 33.1%, the highest quarterly level in over five years, despite lower revenue [6][17] - Cash from operations more than doubled year-over-year, with free cash flow up nearly 300% compared to the same period last year [6][5] - Adjusted EBITDA for the second quarter was $11.5 million, down from $24 million in the prior year [22] Business Line Data and Key Metrics Changes - The company maintained a gross profit margin of approximately 29% year-to-date, despite a significant decline in sales [19] - Selling, general and administrative expenses decreased by over 10% compared to the year-ago quarter [20] - The company initiated a cost reduction program in April 2020, reducing overhead by approximately 10% [21] Market Data and Key Metrics Changes - The company anticipates a sequential revenue improvement of up to 20% in the third quarter compared to the second quarter [27] - The oil and gas market is experiencing pressure to condense supply chains, which the company is adapting to [8][10] - The aerospace sector is seeing a trend of consolidation in supply chains, which is expected to increase demand for the company's services [11] Company Strategy and Development Direction - The company is enhancing service offerings and diversifying into new markets, including the industrial Internet of Things [10][30] - There is a focus on transitioning to value-added services, which is expected to accelerate due to the pandemic [7][75] - The company aims to leverage unique technology into markets with significant growth potential [10][75] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a market recovery in the second half of 2020, with resumed revenue growth and adjusted EBITDA expansion [74] - The ongoing pandemic is expected to drive innovation and improvements in operational efficiency [30][75] - Management noted that the current economic environment is creating opportunities for the company to consolidate supply chains for customers [12][75] Other Important Information - The effective income tax rate for the second quarter was a 21% benefit, compared to a 37% expense in the prior year [26] - The company maintained liquidity of over $55 million, exceeding the minimum requirement of $20 million [22] Q&A Session Summary Question: What were the achieved cost reductions in the second quarter? - Management indicated that Q3 would look similar to Q2 in terms of cost reductions, with a continued focus on calibrating the cost footprint to match revenue [35] Question: What portion of planned turnarounds shifted from the first half into the second half? - Management noted that some turnarounds were deferred into 2021, while others were ongoing but extended due to COVID-19 [36][40] Question: What is the outlook for growth in 2021? - Management has not set a budget yet but aims to approximate 2019 levels, with expectations for significant growth off a low 2020 baseline [42][46] Question: Can you discuss the competitive environment and opportunities for gaining market share? - Management highlighted that larger, financially stable vendors will be favored, and there will be a shift towards fewer vendors handling more complex projects [47][48] Question: What is driving the expected decrease in revenue year-over-year? - Management attributed the decrease to delays in turnarounds and reduced spending in the oil and gas sector [50][52] Question: Is the current level of SG&A sustainable? - Management confirmed that the current SG&A level is sustainable and that they are focused on reducing fixed overheads further [72]

PART I—FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for Mistras Group, Inc. [ITEM 1. Financial Statements](index=4&type=section&id=ITEM%201.%20Financial%20Statements) This section presents unaudited condensed consolidated financial statements, reflecting significant impacts from COVID-19 and oil price volatility [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at June 30, 2020, and December 31, 2019 | Metric | June 30, 2020 ($k) | December 31, 2019 ($k) | | :------------------------ | :------------------- | :--------------------- | | Total Assets | 567,678 | 719,878 | | Total Liabilities | 391,215 | 433,856 | | Total Equity | 176,463 | 286,022 | [Unaudited Condensed Consolidated Statements of Income (Loss)](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)) This section presents the company's revenue and net income (loss) for the three and six months ended June 30, 2020 and 2019 Three Months Ended June 30 | Metric | Three months ended June 30, 2020 ($k) | Three months ended June 30, 2019 ($k) | | :--------------------------------------- | :------------------------------------ | :------------------------------------ | | Revenue | 124,435 | 200,616 | | Net income (loss) | (2,665) | 7,443 | | Basic EPS | (0.09) | 0.26 | | Diluted EPS | (0.09) | 0.26 | Six Months Ended June 30 | Metric | Six months ended June 30, 2020 ($k) | Six months ended June 30, 2019 ($k) | | :--------------------------------------- | :---------------------------------- | :---------------------------------- | | Revenue | 283,900 | 377,403 | | Net income (loss) | (101,187) | 2,157 | | Basic EPS | (3.49) | 0.07 | | Diluted EPS | (3.49) | 0.07 | | Impairment charges | 106,062 | — | [Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section presents the company's comprehensive income (loss) for the three and six months ended June 30, 2020 and 2019 Three Months Ended June 30 | Metric | Three months ended June 30, 2020 ($k) | Three months ended June 30, 2019 ($k) | | :--------------------------------------- | :------------------------------------ | :------------------------------------ | | Net income (loss) | (2,665) | 7,443 | | Comprehensive income (loss) | 3,457 | 11,092 | Six Months Ended June 30 | Metric | Six months ended June 30, 2020 ($k) | Six months ended June 30, 2019 ($k) | | :--------------------------------------- | :---------------------------------- | :---------------------------------- |\ | Net income (loss) | (101,187) | 2,157 | | Comprehensive income (loss) | (112,074) | 7,937 | [Unaudited Condensed Consolidated Statements of Equity](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Equity) This section outlines changes in the company's total equity for the six months ended June 30, 2020 and 2019 Total Equity | Metric | June 30, 2020 ($k) | June 30, 2019 ($k) | | :-------------------- | :----------------- | :----------------- | | Total Equity | 176,463 | 281,279 | - Net loss attributable to Mistras Group, Inc. for the six months ended June 30, 2020, was **$(101,165)k**, compared to net income of **$2,138k** for the same period in 2019[20](index=20&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2020 and 2019 Cash Flow Activities | Cash Flow Activity | Six months ended June 30, 2020 ($k) | Six months ended June 30, 2019 ($k) | | :--------------------------------------- | :---------------------------------- | :---------------------------------- | | Net cash provided by operating activities | 34,862 | 21,105 | | Net cash used in investing activities | (7,248) | (11,048) | | Net cash used in financing activities | (20,337) | (23,139) | | Net change in cash and cash equivalents | 7,572 | (13,043) | | Cash and cash equivalents at end of period | 22,588 | 12,501 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures for the financial statements, covering business, COVID-19 impacts, impairment charges, accounting policies, and segment information [1. Description of Business and Basis of Presentation](index=10&type=section&id=1.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) This note describes Mistras Group's business, the impact of COVID-19 and oil price volatility, and related impairment charges and cost reduction programs - Mistras Group, Inc. is a leading global provider of technology-enabled asset protection solutions for critical energy, industrial, public infrastructure, and commercial aerospace components[24](index=24&type=chunk) - The COVID-19 pandemic, significant oil price volatility, and decreased aerospace traffic adversely affected the company's workforce and operations, leading to customer spending cuts and potential contract reductions[25](index=25&type=chunk)[26](index=26&type=chunk) - The company recorded impairment charges in Q1 2020: approximately **$77.1 million** for goodwill, **$28.8 million** for intangible assets, and **$0.2 million** for a right-of-use asset, driven by market volatility[27](index=27&type=chunk) - A cost reduction and efficiency program was initiated in March 2020, including temporary salary reductions for executives (**25-45%**) and other salaried employees, suspension of company match for savings plans, and director payment reductions[29](index=29&type=chunk) Effective Income Tax Rate | Metric | Q2 2020 | Q2 2019 | YTD 2020 | YTD 2019 | | :---------------------- | :------ | :------ | :------- | :------- | | Effective Income Tax Rate | 21% | 37% | 14% | 45% | - The CARES Act provides a five-year carryback of net operating losses (2018-2020), offering a tax benefit in excess of the current federal statutory rate (**35% vs. 21%**) and is projected to result in additional income tax benefit in 2020 and a cash refund in 2021[40](index=40&type=chunk) [2. Revenue](index=13&type=section&id=2.%20Revenue) This note details the company's revenue recognition policies and provides a breakdown of revenue by industry and geographic region - The majority of the company's revenue is derived from providing services on a time and material basis, recognized over time as work progresses[44](index=44&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) - Product sales are recognized at the point in time when the customer obtains control, generally upon shipment[48](index=48&type=chunk) Revenue by Industry (Q2) | Industry | Q2 2020 ($k) | Q2 2019 ($k) | Change ($k) | Change (%) | | :-------------------------------- | :----------- | :----------- | :---------- | :--------- | | Oil & Gas | 66,686 | 121,335 | (54,649) | -45.0% | | Aerospace & Defense | 17,994 | 24,330 | (6,336) | -26.0% | | Industrials | 14,534 | 25,744 | (11,210) | -43.5% | | Power generation & Transmission | 9,503 | 11,470 | (1,967) | -17.1% | | Other Process Industries | 7,683 | 8,956 | (1,273) | -14.2% | | Infrastructure, Research & Engineering | 6,914 | 6,382 | 532 | 8.3% | | Other | 1,121 | 2,399 | (1,278) | -53.3% | | **Total** | **124,435** | **200,616** | **(76,181)** | **-38.0%** | Revenue by Industry (YTD) | Industry | YTD 2