Mistras (MG) - 2025 Q1 - Quarterly Results

MISTRAS First Quarter 2025 Results Financial & Operational Highlights 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] - 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] Financial Performance Analysis Q1 2025 financial performance showed lower revenue but improved cost management, gross margin, and reduced SG&A expenses Revenue Analysis 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] 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 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] - 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][8][41] Expense Management 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] - 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] - The company recorded $3.1 million of reorganization and other costs related to the continued calibration of support, overhead, and other related costs[12] Balance Sheet and Cash Flow 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] 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 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] - 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] Financial Statements and Non-GAAP Reconciliations This section provides detailed unaudited Q1 2025 financial statements, including balance sheets, income statements, revenue breakdowns, and non-GAAP reconciliations Consolidated Financial Statements 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] - 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][23] Non-GAAP Reconciliations 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 |