Core Insights - Mistras Group (NYSE: MG) shares have declined approximately 36% since its IPO nearly 16 years ago, contrasting with a significant gain from a simple investment in the S&P 500 index [1] Group 1 - Mistras Group's performance has underperformed the broader market, indicating potential challenges in its business model or market conditions [1]

Core Insights - MISTRAS Group, Inc. has appointed Cody Elliott as Vice President of Pipeline Data Solutions to enhance its inline inspection and integrity engineering services [1][2] - Cody Elliott brings 15 years of experience in the oil and gas industry, with a focus on asset integrity and a proven track record of driving double-digit growth [2][3] - The company aims to provide advanced inline inspection and integrity analytics across North America, helping operators manage risk and maintain regulatory compliance [3][4] Company Overview - MISTRAS Group, Inc. is a global leader in technology-enabled industrial asset integrity solutions, serving critical industries such as oil & gas, aerospace & defense, and civil infrastructure [6] - The company offers a diversified portfolio that includes non-destructive testing, pipeline inspections, and real-time condition monitoring, supported by proprietary management software for predictive analytics [6] - MISTRAS' integrated approach to pipeline integrity management allows clients to reduce risk, extend asset life, and make data-driven decisions [4][6]

Revenue Performance - Revenue for the three months ended March 31, 2025, was $161.6 million, a decrease of $22.8 million, or 12.4%, compared to $184.4 million in the same period of 2024[142]. - North America segment revenue decreased by 14.3% to $128.9 million, primarily due to a decline in the Oil and Gas market revenue[144]. - International segment revenue increased by 0.5% to $33.2 million, driven by low double-digit organic growth and favorable foreign exchange impacts[144]. - Products and Systems segment revenue decreased by 3.7% to $3.1 million, attributed to decreased sales volume and shipments[144]. - Total revenue for the three months ended March 31, 2025, was $161.6 million, a decrease of 12.4% compared to $184.4 million in the same period of 2024[148]. - Field Services revenue decreased by $16.2 million, primarily due to reduced sales volume in oil and gas, industrials, and infrastructure markets[149]. - Oil and gas customer revenue accounted for approximately 60% of total revenue in both the three months ended March 31, 2025, and 2024[145]. - The top ten customers represented approximately 37% of total revenue for the three months ended March 31, 2025, down from 39% in the prior year[145]. - Oil and gas revenue by sub-category showed a total decrease from $113.2 million in 2024 to $96.6 million in 2025, with upstream, midstream, and downstream revenues decreasing by 4%, 26%, and 19% respectively[147]. Financial Position - The company's cash balance as of March 31, 2025, was approximately $18.5 million, indicating strong liquidity[132]. - As of March 31, 2025, cash and cash equivalents totaled $18.5 million, with $114.0 million of unused commitments under the Credit Agreement[169]. - Cash provided by operating activities was $5.6 million, representing a year-on-year increase of $5.0 million, or 835%[165]. - Interest expense decreased to approximately $3.3 million in Q1 2025 from $4.4 million in Q1 2024 due to lower overall borrowings[160]. - The company was in compliance with the terms of the Credit Agreement as of March 31, 2025, and will continue to monitor compliance with covenants[170]. Profitability and Expenses - Gross profit decreased by $5.3 million, or 11.4%, with a gross profit margin of 25.3% for Q1 2025 compared to 25.0% in Q1 2024[153][155]. - Operating expenses increased by $1.3 million, or 3.2%, with selling, general and administrative expenses decreasing by $0.6 million due to cost discipline[157]. - Income from operations (GAAP) for Q1 2025 was a loss of $1.0 million, a decrease of $6.6 million compared to income of $5.6 million in Q1 2024[159]. Strategic Initiatives - The company continues to focus on integrating asset protection solutions through its OneSuite platform, which offers over 90 applications in a centralized environment[131]. - The company has made numerous acquisitions to expand its service lines and geographical reach, enhancing its competitive advantages[129]. Taxation - The effective income tax rate increased to approximately 26.9% in Q1 2025 from 10.6% in Q1 2024, primarily due to the impact of favorable discrete items related to stock compensation[161][162].

Financial Data and Key Metrics Changes - Revenue decreased by over 12% year over year, primarily due to market uncertainty, with a notable decline of $16.6 million in the oil and gas end market [10][11] - The company reported a GAAP net loss of $3.2 million or $0.10 per share, while the non-GAAP net loss was $0.01 per share for the first quarter [17] - Adjusted EBITDA decreased by $4.2 million to $12 million, marking the second highest first quarter adjusted EBITDA performance in the last five years [17] - Net cash provided by operating activities increased by $5 million to $5.6 million compared to the first quarter of the previous year [18] Business Line Data and Key Metrics Changes - The oil and gas end market experienced the largest revenue decline, particularly in the downstream sector, attributed to timing of turnarounds and project delays [10][11] - Aerospace and defense end market saw a revenue decline of $1.7 million due to macroeconomic uncertainties and supply chain disruptions [11] - The Data Solutions Group, particularly the PCMS offering, achieved a revenue growth of 6% compared to the prior year [13] Market Data and Key Metrics Changes - The international segment revenue grew nearly 4% in local currency, although this was offset by adverse foreign exchange translation [15] - The company noted a reduction in customer spending and project pushouts in upstream and midstream sub-industries due to market uncertainties [11] Company Strategy and Development Direction - The company is focusing on three key initiatives: leadership talent evaluation, recalibration of cost base, and developing growth strategies across all businesses [6] - Mistras is emphasizing accelerated expansion in core end markets like oil and gas and aerospace and defense, with a focus on integrated solutions leveraging data analytics [8][10] - The launch of the Mistras Data Solution brand consolidates data-centric services and technologies, aiming to enhance operations for asset-intensive end markets [10] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the remainder of the year despite a slower start in key markets, with expectations of recovering revenue in the oil and gas sector [12][23] - The company is closely monitoring potential industry headwinds caused by global market uncertainties and tariffs [12][22] - Management anticipates that adjusted EBITDA for 2025 will at least meet or exceed the levels achieved in 2024 [23] Other Important Information - The company is not providing full-year guidance for fiscal 2025 due to unprecedented market uncertainty [22] - The effective tax rate for the first quarter was 26.9%, with an anticipated rate of approximately 25% for the full year [19] Q&A Session Summary Question: Changes in the operating environment compared to three months ago - Management noted unprecedented uncertainty affecting project delays and customer evaluations regarding tariffs [33] Question: Impact of tariffs on business and customer decisions - The direct impact of tariffs on Mistras is minimal, but customers are experiencing delays in spending due to economic conditions [44][49] Question: Pricing initiatives and discussions with customers - The company is maintaining commercial discipline and reviewing contract economics to ensure fair ROI for services [38] Question: Outlook for international growth - International revenue grew about 4% organically, with a diversified business model reducing variability compared to North America [65] Question: Expectations for midstream and downstream markets - Demand is expected to remain stable, but current uncertainties may affect short-term performance [68] Question: Revenue recovery expectations in the oil and gas sector - The company expects to recover $6.5 million in revenue from turnarounds in the second half of the year [78]

Financial Data and Key Metrics Changes - Revenue decreased by over 12% year-over-year, primarily due to market uncertainty, with a notable decline of $16.6 million in the oil and gas end market [10][11] - The company reported a GAAP net loss of $3.2 million or $0.10 per share, while the non-GAAP net loss was $0.01 per share for the first quarter [18] - Adjusted EBITDA decreased by $4.2 million to $12 million, marking the second highest first quarter adjusted EBITDA performance in the last five years [18] - Net cash provided by operating activities was $5.6 million, an increase of $5 million compared to the prior year [19] Business Line Data and Key Metrics Changes - The oil and gas end market experienced the largest revenue decline, particularly in the downstream sector, attributed to timing of turnarounds and project delays [10][11] - Aerospace and defense revenue declined by $1.7 million due to macroeconomic uncertainties and supply chain disruptions [11][12] - The Data Solutions Group, particularly the PCMS offering, saw a revenue growth of 6% compared to the prior year [13] Market Data and Key Metrics Changes - The international segment revenue increased by nearly 4% in local currency, although this was offset by adverse foreign exchange translation [16] - The company noted a reduction in customer spending and project pushouts in upstream and midstream sub-industries due to market uncertainties [11] Company Strategy and Development Direction - The company is focusing on three key initiatives: leadership talent evaluation, recalibration of cost base, and developing growth strategies across all businesses [6][7] - Mistras is emphasizing accelerated expansion in core end markets like oil and gas and aerospace and defense, with a focus on integrated solutions leveraging data analytics [7][9] - The launch of the Mistras Data Solution brand consolidates data-centric services and technologies, aiming to enhance operations for asset-intensive end markets [10] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the remainder of the year despite a slower start in key markets, with expectations of recovering revenue in the oil and gas sector [11][12] - The company is closely monitoring potential industry headwinds caused by global market uncertainties and tariffs [12][23] - Management anticipates that adjusted EBITDA for 2025 will at least meet or exceed the levels achieved in 2024 [24] Other Important Information - The company is not providing full-year guidance for fiscal 2025 due to unprecedented market uncertainty [23] - The effective tax rate for the first quarter was a tax benefit of 26.9%, with an anticipated rate of approximately 25% for the full year [20] Q&A Session Summary Question: Changes in the operating environment compared to three months ago - Management noted unprecedented uncertainty affecting project delays and customer evaluations regarding tariffs [33][34] Question: Impact of tariffs on business and project delays - The direct impact of tariffs on Mistras is minimal, but customers are pausing or delaying spending due to economic conditions [42] Question: Pricing initiatives and customer discussions - The company is maintaining commercial discipline and reviewing contract economics to ensure fair ROI for services [37][38] Question: Outlook on midstream and downstream markets - Revenue reduction in midstream is attributed to budget restrictions and regulatory drivers, with expectations of demand recovery later in the year [53] Question: Expectations for revenue and EBITDA - Management indicated that adjusted EBITDA is expected to be similar to last year, suggesting that revenue may not be significantly lower than the previous year [55][56]

Financial Performance - Q1 2025 revenue was $161.6 million, compared to $184.4 million in Q1 2024[34] - Gross profit for Q1 2025 was $40.9 million, with a gross margin of 25.3%[36] - Adjusted EBITDA for Q1 2025 was $12.0 million[36] - Net loss for Q1 2025 was $3.2 million, compared to a net income of $1.0 million in Q1 2024[36] - Net cash provided by operating activities was $5.6 million in Q1 2025[39] - Free cash flow was -$0.2 million in Q1 2025[39] Strategic Initiatives - MISTRAS officially launched the MISTRAS Data Solutions brand, consolidating data-centric services, software, and technologies[8] - The company is focusing on integrated solutions and leveraging data analytics and monitoring technologies[8] - MISTRAS is emphasizing technology-enabled asset integrity solutions[16] Market Segments - Oil & Gas revenue totaled $96.6 million in Q1 2025, with Upstream contributing $40.3 million (41.7%), Midstream $15.8 million (16.4%), and Downstream $40.5 million (41.9%)[14] - Aerospace & Defense revenue was $20.4 million in Q1 2025[34] - Industrials revenue was $18.6 million in Q1 2025[34]

Company Performance - Mistras reported a quarterly loss of $0.01 per share, missing the Zacks Consensus Estimate of $0.16, and compared to earnings of $0.07 per share a year ago, representing an earnings surprise of -106.25% [1] - The company posted revenues of $161.62 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 10.48%, and down from $184.44 million year-over-year [2] - Over the last four quarters, Mistras has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Market Performance - Mistras shares have increased by approximately 5.9% since the beginning of the year, contrasting with the S&P 500's decline of -4.7% [3] - The current consensus EPS estimate for the coming quarter is $0.24 on revenues of $187.36 million, and for the current fiscal year, it is $0.83 on revenues of $747.59 million [7] Industry Outlook - The Zacks Industry Rank for Electronics - Miscellaneous Products is currently in the bottom 43% of over 250 Zacks industries, indicating potential challenges for stocks in this sector [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that the industry outlook can significantly impact stock performance [5][8]

MISTRAS First Quarter 2025 Results [Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) MISTRAS Group reported a 12.4% revenue decline in Q1 2025, improving gross margin and achieving positive operating cash flow Q1 2025 Financial Highlights | Metric | Q1 2025 Value | Change (YoY) | | :--- | :--- | :--- | | Revenue | $161.6 million | -12.4% | | Gross Profit | $40.9 million | - | | Gross Profit Margin | 25.3% | +30 bps | | SG&A Expenses | $35.7 million | -1.7% | | Net Loss | $3.2 million | (vs. $1.0M income in Q1 2024) | | Adjusted EBITDA | $12.0 million | -25.4% | | Net Cash from Operating Activities | $5.6 million | +$5.0 million | - The CEO noted that despite a larger-than-anticipated revenue decline from market uncertainty, the company was able to rapidly calibrate costs to preserve operational metrics[4](index=4&type=chunk) - Strategic initiatives announced include: - Reinvigorating senior leadership with new, experienced hires - Integrating Data Solutions to create a scalable asset protection ecosystem - Unifying accredited laboratories to reduce cycle times and simplify quality assurance for the Aerospace and Defense platform[1](index=1&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) Q1 2025 financial performance showed lower revenue but improved cost management, gross margin, and reduced SG&A expenses [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis) Consolidated revenue for Q1 2025 decreased by 12.4% to $161.6 million, primarily from a $16.6 million decline in Oil & Gas - Q1 2025 consolidated revenue was **$161.6 million**, a decrease of **12.4%** from Q1 2024, primarily driven by a **$16.6 million** decrease in Oil & Gas market revenues[4](index=4&type=chunk) Revenue by Segment (in thousands) | Segment | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | North America | $128,902 | $150,349 | -14.3% | | International | $33,214 | $33,047 | +0.5% | | Products and Systems | $3,091 | $3,210 | -3.7% | Revenue by Industry (in thousands) | Industry | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Oil & Gas | $96,564 | $113,165 | -14.7% | | Aerospace & Defense | $20,404 | $22,118 | -7.7% | | Industrials | $18,570 | $15,199 | +22.2% | [Profitability Analysis](index=2&type=section&id=Profitability%20Analysis) Gross profit decreased to $40.9 million, but margin improved to 25.3%, leading to a net loss and $12.0 million Adjusted EBITDA Profitability Metrics Comparison (YoY) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Gross Profit | $40.9 million | $46.2 million | | Gross Profit Margin | 25.3% | 25.0% | | Net (Loss) Income | ($3.2 million) | $1.0 million | | Diluted EPS | ($0.10) | $0.03 | | Adjusted EBITDA | $12.0 million | $16.2 million | - The improvement in gross profit margin was due to lower healthcare claims expense and a favorable sales mix[5](index=5&type=chunk) - The Q1 2025 net loss of **$3.2 million** included **$3.6 million** of special items, with the non-GAAP net loss being **$0.3 million**, or **($0.01)** per share, excluding these items[2](index=2&type=chunk)[8](index=8&type=chunk)[41](index=41&type=chunk) [Expense Management](index=2&type=section&id=Expense%20Management) The company reduced SG&A expenses by 1.7% to $35.7 million, reclassified $6.0 million in costs, and incurred $3.1 million in reorganization - SG&A expenses decreased by **1.7%** to **$35.7 million** from the prior year, reflecting continued cost discipline[7](index=7&type=chunk) - The company reclassified **$6.0 million** of certain overhead and personnel expenses from SG&A to Cost of Revenue to provide greater transparency on costs directly related to service delivery[6](index=6&type=chunk) - The company recorded **$3.1 million** of reorganization and other costs related to the continued calibration of support, overhead, and other related costs[12](index=12&type=chunk) [Balance Sheet and Cash Flow](index=3&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) MISTRAS significantly improved Q1 2025 cash flow, with net operating cash increasing to $5.6 million and free cash flow improving to negative $0.2 million Cash Flow Summary (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $5,645 | $604 | | Free Cash Flow (non-GAAP) | ($177) | ($5,317) | - The improvement in free cash flow was primarily attributable to a favorable working capital reduction compared to the prior year period[10](index=10&type=chunk) Debt Summary (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Gross Debt | $171,874 | $169,647 | | Net Debt (non-GAAP) | $153,338 | $151,330 | [2025 Outlook](index=3&type=section&id=2025%20Outlook) MISTRAS has withdrawn its full-year fiscal 2025 guidance due to unprecedented market uncertainty and an ongoing business portfolio review - The Company is not providing full year guidance for fiscal 2025[13](index=13&type=chunk) - Reasons for withdrawing guidance include unprecedented market uncertainty from tariffs, changes to U.S. trade policy, other market conditions, and an ongoing business portfolio review by the new CEO[13](index=13&type=chunk) [Financial Statements and Non-GAAP Reconciliations](index=5&type=section&id=Financial%20Statements%20and%20Non-GAAP%20Reconciliations) This section provides detailed unaudited Q1 2025 financial statements, including balance sheets, income statements, revenue breakdowns, and non-GAAP reconciliations [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) The unaudited consolidated balance sheet shows total assets of $526.8 million, with the income statement detailing the $3.2 million net loss for the quarter - Total assets were **$526.8 million** as of March 31, 2025, compared to **$523.0 million** as of December 31, 2024[21](index=21&type=chunk) - The Unaudited Condensed Consolidated Statements of Income (Loss) for the three months ended March 31, 2025, are provided, showing a net loss of **$3.168 million**[22](index=22&type=chunk)[23](index=23&type=chunk) [Non-GAAP Reconciliations](index=12&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliations for key non-GAAP metrics, including Adjusted EBITDA, Free Cash Flow, and Net Income Excluding Special Items Reconciliation to Adjusted EBITDA (non-GAAP) (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net (loss) income attributable to Mistras Group, Inc. | $(3,186) | $995 | | Interest expense | 3,324 | 4,430 | | Income tax (benefit)/expense | (1,168) | 119 | | Depreciation and amortization | 7,763 | 8,381 | | Share-based compensation expense | 1,302 | 1,228 | | Reorganization and other costs | 3,087 | 1,558 | | Environmental expense | 540 | — | | Foreign exchange loss (gain) | 374 | (561) | | **Adjusted EBITDA (non-GAAP)** | **$12,036** | **$16,150** | Reconciliation to Free Cash Flow (non-GAAP) (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities (GAAP) | $5,645 | $604 | | Less: Purchases of property, plant and equipment | (4,555) | (4,804) | | Less: Purchases of intangible assets | (1,267) | (1,117) | | **Free cash flow (non-GAAP)** | **$(177)** | **$(5,317)** | Reconciliation to Net Income Excluding Special Items (non-GAAP) (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net (loss) income attributable to Mistras Group, Inc. (GAAP) | $(3,186) | $995 | | Special items, net of tax | $2,846 | $1,177 | | **Net (loss) income ... Excluding Special Items (non-GAAP)** | **$(340)** | **$2,172** |

Core Insights - MISTRAS Group, Inc. reported a consolidated revenue of $161.6 million for Q1 2025, reflecting a 12.4% decrease compared to Q1 2024, primarily due to a $16.6 million decline in Oil & Gas market revenues and other key markets affected by macroeconomic factors [4][6][10] - The company experienced a net loss of $3.2 million in Q1 2025, compared to a net income of $1.0 million in the same period last year, with adjusted EBITDA declining by 25.4% to $12.0 million [9][10][39] - Despite the revenue decline, gross profit margin increased by 30 basis points to 25.3%, attributed to lower healthcare claims and a favorable sales mix [5][6] Financial Performance - Consolidated revenue for Q1 2025 was $161.6 million, down from $184.4 million in Q1 2024 [6][24] - Gross profit was $40.9 million, with a gross profit margin of 25.3% [6][24] - Selling, general, and administrative expenses decreased by 1.7% to $35.7 million [8][24] - The company recorded a net loss of $3.2 million, or ($0.10) per share, compared to a net income of $1.0 million, or $0.03 per share, in the prior year [9][24] Market Dynamics - The decline in revenue was primarily driven by a decrease in Oil & Gas revenues, which fell to $96.6 million from $113.2 million year-over-year, with upstream, midstream, and downstream sectors all experiencing declines [4][27] - The company is focusing on cost management and anticipates revenue growth across primary industries, including Industrials and Infrastructure, to improve profitability metrics [4][10] Cash Flow and Debt - Net cash provided by operating activities was $5.6 million, significantly up from $0.6 million in the prior year [11][32] - The company's gross debt increased to $171.9 million as of March 31, 2025, from $169.6 million at the end of 2024 [12][36] - Free cash flow was negative $0.2 million for Q1 2025, an improvement from negative $5.3 million in the prior year [11][35] Strategic Outlook - The company is not providing full-year guidance for 2025 due to market uncertainties related to tariffs and changes in U.S. trade policy [14] - MISTRAS is leveraging its technological advantages and focusing on existing end markets to drive future growth [4][10]

Group 1 - MISTRAS Group, Inc. has scheduled a conference call for May 8, 2025, at 9:00 am Eastern Standard Time to present its first quarter results for 2025 [1] - A press release with the first quarter results will be issued after the market closes on May 7, 2025 [1] - Individuals can pre-register for the live question and answer session at a specified link [2] Group 2 - MISTRAS Group, Inc. is a global leader in technology-enabled industrial asset integrity solutions, serving critical industries such as oil & gas, aerospace & defense, power & utilities, manufacturing, and civil infrastructure [3] - The company offers a diversified portfolio of products and services, including advanced non-destructive testing, pipeline inspections, real-time condition monitoring, maintenance planning, and specialized engineering [3] - MISTRAS Group utilizes a proprietary management software suite that centralizes integrity data for predictive analytics and benchmark analysis, helping clients reduce risk, extend asset life, and optimize operational performance [3]