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]

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]