MISTRAS Announces Second Quarter and First Half 2025 Results

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].