Mistras (US:MG)2020-03-26 22:07Financial Data and Key Metrics Changes - The company reported consolidated revenue of $748.6 million for 2019, a modest increase from $742.4 million in 2018, with acquisitions contributing 3.7% to revenue growth, offset by a 3% decline from discontinued contracts and a 1.5% negative impact from foreign exchange [34] - Gross profit increased to $217.3 million from $207.9 million, with gross profit margin improving by 100 basis points to 29% [35] - Free cash flow rose by 76% year-over-year to $36.2 million, compared to $20.5 million in the previous year [39] Business Line Data and Key Metrics Changes - All three segments of the business improved their gross margins over the past two years, contributing to overall gross margin expansion [23] - The company maintained a modest 1.8% increase in SG&A expenses, with core SG&A expenses declining nearly 3% year-over-year after accounting for acquisition-related costs [36] Market Data and Key Metrics Changes - The company experienced a 1% decline in consolidated revenues for Q4 2019, with organic revenue down 2.6% and a 0.7% decline due to unfavorable effects, partially offset by acquisition growth of 2.3% [41] - The company anticipates a mid-teens percentage decline in revenue for Q1 2020 due to the impact of COVID-19 and low crude oil prices [49] Company Strategy and Development Direction - The company is strategically expanding into complementary growth markets, including midstream and aerospace, while investing in digital initiatives to leverage its capabilities [53] - The focus remains on improving returns by shutting down underperforming business units and enhancing productivity [54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate positive cash flow for the full year of 2020 despite the challenges posed by COVID-19 [15] - The company refrained from providing full-year guidance due to the uncertainty surrounding market conditions and the ongoing pandemic [48] Other Important Information - The company has established a dedicated virus response team to manage workforce safety and customer operations during the pandemic [7] - The leverage ratio was approximately 3.6 times as of December 31, 2019, compliant with credit agreements, with a deferral granted for leverage step-downs [46] Q&A Session Summary Question: Impact of deferred projects on 2020 - Management indicated that some projects are being delayed by 2 to 6 weeks, with few completely canceled, as customers are reducing hours and limiting outside personnel [66] Question: Updates on aerospace and midstream markets - Aerospace business is holding up well, with most customers considered essential, while midstream efforts are progressing, though the situation remains fluid [75] Question: Visibility on revenue for Q2 - Management noted decent visibility for Q2 but emphasized the fluidity of the situation, particularly in Europe due to lockdowns [102][104]