Company Performance - Mistras reported quarterly earnings of $0.19 per share, exceeding the Zacks Consensus Estimate of $0.17 per share, but down from $0.21 per share a year ago, representing an earnings surprise of +11.76% [1] - The company posted revenues of $185.41 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 0.19% and down from $189.77 million year-over-year [2] - Over the last four quarters, Mistras has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Stock Performance - Mistras shares have declined approximately 12.7% since the beginning of the year, while the S&P 500 has gained 7.1% [3] - The current Zacks Rank for Mistras is 3 (Hold), indicating that shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.27 on revenues of $185.69 million, and for the current fiscal year, it is $0.67 on revenues of $710.04 million [7] - The outlook for the Electronics - Miscellaneous Products industry, to which Mistras belongs, is currently in the bottom 38% of over 250 Zacks industries, which may impact stock performance [8]

Revenue Performance - Revenue for the second quarter of 2025 was $185.4 million, a decrease of 2.3%, but flat when excluding voluntary laboratory consolidations[4] - Total revenue for Q2 2025 was $185.4 million, a decrease of 2.4% from $189.8 million in Q2 2024[22] - The total revenue for the six months ended June 30, 2025, was $347,020 thousand, compared to $374,215 thousand in 2024, reflecting a decline of 7%[29] - North America revenue for Q2 2025 was $148.0 million, down 5.3% from $156.4 million in Q2 2024[24] - International revenue for Q2 2025 increased to $39.1 million, up 14.5% from $34.3 million in Q2 2024[24] Profitability Metrics - Gross profit increased by 5.1% to $53.9 million, with a gross profit margin of 29.1%, an expansion of 200 basis points compared to the prior year[4] - Gross profit for Q2 2025 increased to $53.9 million, up 4.9% from $51.3 million in Q2 2024[22] - Net income for the second quarter was $3.0 million, or $0.10 per diluted share, down from $6.4 million, or $0.20 per diluted share in the prior year[7] - Net income attributable to Mistras Group, Inc. for Q2 2025 was $3.0 million, compared to $6.4 million in Q2 2024, reflecting a decline of 52.7%[22] - For the three months ended June 30, 2025, net income attributable to Mistras Group, Inc. (GAAP) was $3.017 million, compared to $6.369 million in the same period of 2024, representing a decrease of 52.7%[41] Cash Flow and Debt - Free cash flow (non-GAAP) was negative $16.2 million in the first half of 2025, compared to negative $6.9 million in the prior year[9] - Net cash used in operating activities was $3.5 million in the first half of 2025, a decrease from $5.1 million provided in the prior year, largely due to an increase in days sales outstanding[8] - The company’s gross debt increased to $189.4 million as of June 30, 2025, from $169.6 million at the end of 2024[10] - The trailing 12-month total consolidated debt leverage ratio was just under 2.75 to 1.0, slightly up from December 31, 2024, but still within the required limit[11] - Total liabilities increased to $354.9 million as of June 30, 2025, compared to $324.1 million at the end of 2024[20] Adjusted Metrics - Adjusted EBITDA reached an all-time high of $24.1 million, an increase of 8.9% year-over-year, with an adjusted EBITDA margin of 13.0%, up 130 basis points[4] - Adjusted EBITDA (non-GAAP) for the three months ended June 30, 2025, was $24,106 thousand, up from $22,130 thousand in 2024, representing an increase of 9%[39] - The company expects its 2025 Adjusted EBITDA to exceed the level achieved in 2024, which was the second highest annual level in its history[13] Special Items and Tax Impact - The company recorded $3.0 million in reorganization and other costs in the second quarter of 2025 as part of its initiative to reduce overhead costs[6] - Special items for the three months ended June 30, 2025, amounted to $3.469 million, significantly higher than $578,000 in 2024[41] - The tax impact on special items for the three months ended June 30, 2025, was $(720,000), compared to $(140,000) in 2024[41] - Special items, net of tax, for the three months ended June 30, 2025, were $2.749 million, compared to $438,000 in 2024[41] - The total special items, net of tax, for the six months ended June 30, 2025, were $5.595 million, compared to $1.615 million in 2024, indicating a significant increase[41] Shareholder Metrics - Basic net income per share for Q2 2025 was $0.10, down from $0.21 in Q2 2024[22] - Diluted EPS (GAAP) for the three months ended June 30, 2025, was $0.10, compared to $0.20 in 2024, a decrease of 50%[41] - Diluted EPS excluding special items (non-GAAP) was $0.19 for the three months ended June 30, 2025, compared to $0.21 in 2024, a decline of 9.5%[41] - The total number of anti-dilutive shares excluded from the calculation of diluted earnings per share for the three months ended June 30, 2025, was 1,252,000 shares[41]

Core Insights - MISTRAS Group, Inc. reported robust quarterly organic revenue growth in aerospace & defense and industrial markets, with a significant expansion in gross profit margin of 200 basis points, generating net income of $3.0 million and achieving adjusted EBITDA of $24.1 million for Q2 2025 [1][6][12]. Financial Performance - Revenue for Q2 2025 was $185.4 million, a decrease of 2.3% compared to the prior year, but flat when excluding voluntary laboratory consolidations [7]. - Gross profit increased by 5.1% to $53.9 million, primarily due to an improved business mix and operating efficiencies, resulting in a gross profit margin of 29.1% [7]. - Selling, general, and administrative (SG&A) expenses rose by 10.0% to $39.8 million, largely due to a foreign exchange loss of $2.8 million [7]. - Net income for Q2 2025 was $3.0 million, or $0.10 per diluted share, down from $6.4 million, or $0.20 per diluted share in the prior year [6][7]. - Adjusted EBITDA reached an all-time high of $24.1 million, an increase of 8.9% year-over-year, with an adjusted EBITDA margin of 13.0% [7][12]. Operational Changes - The company reclassified certain overhead and personnel expenses from SG&A to cost of revenue, amounting to $4.8 million for Q2 2024, which provided greater transparency regarding the true cost of revenue [4]. - MISTRAS recorded $3.0 million in reorganization and other costs in Q2 2025 as part of its initiative to reduce overhead costs [5]. Cash Flow and Debt - Net cash used in operating activities was $3.5 million in the first half of 2025, a decrease from $5.1 million of net cash provided in the prior year, primarily due to an increase in days sales outstanding [7]. - Free cash flow was negative $16.2 million in the first half of 2025, compared to negative $6.9 million in the prior year [9]. - The company's gross debt increased to $189.4 million as of June 30, 2025, compared to $169.6 million at the end of 2024 [10]. Market Outlook - The company is not providing full-year guidance for fiscal 2025 as it reviews its entire portfolio of businesses, but it expects adjusted EBITDA to exceed the 2024 level [13].

Company Overview - MISTRAS Group, Inc. is a global leader in technology-enabled industrial asset integrity and testing 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] Upcoming Events - MISTRAS Group has scheduled a conference call for August 7, 2025, at 9:00 am Eastern Time to present its second quarter results for 2025 [1] - A press release with the second quarter results will be issued after the market closes on August 6, 2025 [1] - Individuals can pre-register for the live question and answer session at a specified link [2]

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]