MISTRAS Announces Second Quarter and First Half 2023 Results
- Revenue of $176.0 million in Q2 2023, down 1.7%
- Gross profit of $49.7 million, gross profit margin of 28.2%
- Operating cash flow increased by 134.6% to $18.3 million for the first half of 2023
- None.
Strong revenue growth in key markets - Commercial Aerospace and Data Solutions including OnStream Pipeline
Selling, General and Administrative expenses reduced by
Significant Operating Cashflow increase of
PRINCETON JUNCTION, N.J., Aug. 02, 2023 (GLOBE NEWSWIRE) -- MISTRAS Group, Inc. (MG: NYSE), a leading "one source" multinational provider of integrated technology-enabled asset protection solutions, reported financial results for its second quarter and six months ended June 30, 2023.
Highlights of the Second Quarter 2023*
- Revenue of
$176.0 million , down1.7% - Gross profit of
$49.7 million , with gross profit margin of28.2% - GAAP Net income of
$0.3 million , with Adjusted EBITDA of$15.3 million - Operating Cash Flow of
$13.9 million , and Free Cash Flow of$8.0 million
Highlights of the First Half 2023*
- Revenue of
$344.0 million , up1.0% , a1.9% increase excluding FX exchange impact** - Gross profit of
$95.8 million , up2.5% , with gross profit margin of27.8% , up 40 bps - GAAP Net loss of
$4.6 million , with Adjusted EBITDA up7.9% to$25.7 million - Operating Cash Flow of
$18.3 million , and Free Cash Flow of$7.7 million
* All comparisons are consolidated and versus the equivalent prior year period, unless otherwise noted.
** Foreign currency (“FX”) exchange impact is calculated by converting current period financial results in local currency, using the prior period exchange rates, and comparing this amount to the current period financial results in local currency using the current period exchange rate.
For the second quarter of 2023, consolidated revenue was
Selling, general and administrative expenses (“SG&A”) in the second quarter of 2023 were
The Company generated net income of
Cost Savings Implementation
As announced in February 2023, the Company has been exploring ways to improve profitability and Adjusted EBITDA, through meaningful margin improvement and steps to achieve sustained cost savings. The Company has completed the initial phase of this project, which it refers to as Project Phoenix, wherein efficiency and profitability opportunities were identified. The Company is now undertaking the next phase of validating actionable initiatives, which can then be implemented prospectively. The Company will provide an update at the end of the third quarter of 2023, after further progress is made towards achievement of such opportunities.
The Company has already taken certain actions in 2023 which are expected to yield annualized cost savings of approximately
Chief Executive Officer Dennis Bertolotti commented, “Although we continue to generate revenue growth in many of our key markets, the impact of decreased activity under one of our Defense contracts offset these gains at a consolidated level. Hence, total revenue was down marginally, adjusted for the effect of FX exchange. However, heading into the second half of 2023, we expect Adjusted EBITDA will improve year over year despite revenue being lower than initially anticipated. We have implemented cost-saving initiatives via specific actions, many of which are expected to improve performance in our legacy Oil and Gas business.
There were also several bright spots related to revenue growth drivers in the second quarter of 2023. In particular, West Penn, a key shop laboratory business which specializes in Aerospace, reported an all-time record revenue quarter. Additionally, OnStream, our ILI pipeline testing business, achieved its best second quarter revenue in its history. The OnStream growth was driven by a record quarter for its US business, which increased revenue by over
Mr. Bertolotti continued, “In the second half of the year, we will continue to seek additional, incremental benefits from Project Phoenix, expanding upon what we have already implemented in cost reduction efforts during the first half of 2023. We will continue to improve operating efficiency, which will contribute to an improved bottom line result. We also anticipate that second half revenue will be stable, with modest growth over the comparable prior year period, but with an expanded improvement in Adjusted EBITDA due to a favorable sales mix shift and on-going cost controls.”
Mr. Bertolotti concluded, “Our cash flow remains strong, and I am pleased with the investments that we have made in 2023 related to our higher growth businesses via increased capital expenditures, which will further our expansion in key growth markets. As a result of our cost savings initiatives and the growth in our high margin businesses, I am optimistic that Mistras is positioned to capitalize on the growing demand for our offerings, accelerating our transition to profitable growth.”
Performance by certain segments during the second quarter was as follows:
North America segment (Referred to as “Services” in prior filings) second quarter revenue was
International segment second quarter revenue was
Cash Flow and Balance Sheet
The Company’s net cash provided by operating activities was
The Company’s gross debt was
Reorganization and Other
For the second quarter of 2023, the Company recorded
Outlook
The Company is updating its guidance ranges, to reflect current market conditions and the Company’s focus on profitable growth and cost savings. Revenue for the full year 2023 is now expected to be between
Conference Call
In connection with this release, MISTRAS will hold a conference call on August 3, 2023, at 9:00 a.m. (Eastern).
To listen to the live webcast of the conference call, visit the Investor Relations section of MISTRAS Group’s website at www.mistrasgroup.com
Note there is a new process to participate in the live question and answer session. Individuals wishing to participate may preregister at: https://register.vevent.com/register/BI7c5435a7a0a842eaa827bbb551ae1307.
Upon registering, a dial-in number and unique PIN will be provided to join the conference call. Following the conference call, an archived webcast of the event will be available for one year by visiting the Investor Relations section of MISTRAS Group’s website.
About MISTRAS Group, Inc. - One Source for Asset Protection Solutions®
MISTRAS Group, Inc. (NYSE: MG) is a leading "one source" multinational provider of integrated technology-enabled asset protection solutions, helping to maximize the safety and operational uptime for civilization’s most critical industrial and civil assets.
Backed by an innovative, data-driven asset protection portfolio, proprietary technologies, strong commitment to Environmental, Social, and Governance (ESG) initiatives, and a decades-long legacy of industry leadership, MISTRAS leads clients in the oil and gas, aerospace and defense, renewable and nonrenewable power, civil infrastructure, and manufacturing industries towards achieving operational and environmental excellence. By supporting these organizations that help fuel our vehicles and power our society, inspecting components that are trusted for commercial, defense, and space craft; building real-time monitoring equipment to enable safe travel across bridges; and helping to propel sustainability, MISTRAS helps the world at large.
MISTRAS enhances value for its clients by integrating asset protection throughout supply chains and centralizing integrity data through a suite of Industrial IoT-connected digital software and monitoring solutions. The company’s core capabilities also include non-destructive testing field and in-line inspections enhanced by advanced robotics, laboratory quality control and assurance testing, sensing technologies and NDT equipment, asset and mechanical integrity engineering services, and light mechanical maintenance and access services.
For more information about how MISTRAS helps protect civilization’s critical infrastructure and the environment, visit www.mistrasgroup.com or contact Nestor S. Makarigakis, Group Vice President of Marketing at marcom@mistrasgroup.com.
Forward-Looking and Cautionary Statements
Certain statements made in this press release are "forward-looking statements" about MISTRAS' financial results and estimates, products and services, business model, strategy, growth opportunities, profitability and competitive position, and other matters. These forward-looking statements generally use words such as "future," "possible," "potential," "targeted," "anticipate," "believe," "estimate," "expect," "intend," "plan," "predict," "project," "will," "may," "should," "could," "would" and other similar words and phrases. Such statements are not guarantees of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved, if at all. These statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in these statements. A list, description and discussion of these and other risks and uncertainties can be found in the "Risk Factors" section of the Company's 2022 Annual Report on Form 10-K dated March 15, 2023, as updated by our reports on Form 10-Q and Form 8-K. The forward-looking statements are made as of the date hereof, and MISTRAS undertakes no obligation to update such statements as a result of new information, future events or otherwise.
Use of Non-GAAP Measures
In addition to financial information prepared in accordance with generally accepted accounting principles in the U.S. (GAAP), this press release also contains adjusted financial measures that we believe provide investors and management with supplemental information relating to operating performance and trends that facilitate comparisons between periods and with respect to projected information. The term "Adjusted EBITDA" used in this release is a financial measurement not calculated in accordance with GAAP and is defined as net income attributable to MISTRAS Group, Inc. plus: interest expense, provision for income taxes, depreciation and amortization, share-based compensation expense, certain acquisition related costs (including transaction due diligence costs and adjustments to the fair value of contingent consideration), foreign exchange (gain) loss, non-cash impairment charges, reorganization and related charges and, if applicable, certain additional special items which are noted. A reconciliation of Adjusted EBITDA to a financial measurement under GAAP is set forth in a table attached to this press release. The Company also uses the term “net debt”, a non-GAAP measurement defined as the sum of the current and long-term portions of long-term debt, less cash and cash equivalents and the term “free cash flow”, a non-GAAP measurement the Company defines as cash provided by operating activities less capital expenditures (which is classified as an investing activity). A reconciliation of these non-GAAP financial measurements to GAAP are also set forth in tables attached to this press release. In the tables attached is also a table reconciling “Segment and Total Company Income (Loss) from Operations (GAAP) to Income (Loss) from Operations before Special Items (non-GAAP)", “Net Loss (GAAP) and Diluted EPS (GAAP) to Net Loss Excluding Special Items (non-GAAP) and Diluted EPS Excluding Special Items (non-GAAP)” which reconciles the non-GAAP amounts to GAAP measurements.
Mistras Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
June 30, 2023 | December 31, 2022 | |||||||
ASSETS | (unaudited) | |||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 17,999 | $ | 20,488 | ||||
Accounts receivable, net | 118,773 | 123,657 | ||||||
Inventories | 16,067 | 13,556 | ||||||
Prepaid expenses and other current assets | 17,991 | 10,181 | ||||||
Total current assets | 170,830 | 167,882 | ||||||
Property, plant and equipment, net | 81,297 | 77,561 | ||||||
Intangible assets, net | 46,145 | 49,015 | ||||||
Goodwill | 201,586 | 199,635 | ||||||
Deferred income taxes | 915 | 779 | ||||||
Other assets | 40,173 | 40,032 | ||||||
Total assets | $ | 540,946 | $ | 534,904 | ||||
LIABILITIES AND EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 17,014 | $ | 12,532 | ||||
Accrued expenses and other current liabilities | 78,972 | 77,844 | ||||||
Current portion of long-term debt | 7,550 | 7,425 | ||||||
Current portion of finance lease obligations | 5,188 | 4,201 | ||||||
Income taxes payable | 980 | 1,726 | ||||||
Total current liabilities | 109,704 | 103,728 | ||||||
Long-term debt, net of current portion | 176,121 | 183,826 | ||||||
Obligations under finance leases, net of current portion | 12,441 | 10,045 | ||||||
Deferred income taxes | 10,103 | 6,283 | ||||||
Other long-term liabilities | 32,044 | 32,273 | ||||||
Total liabilities | 340,413 | 336,155 | ||||||
Equity | ||||||||
Preferred stock, 10,000,000 shares authorized | — | — | ||||||
Common stock, | 302 | 298 | ||||||
Additional paid-in capital | 245,058 | 243,031 | ||||||
Accumulated deficit | (16,138 | ) | (11,489 | ) | ||||
Accumulated other comprehensive loss | (29,035 | ) | (33,390 | ) | ||||
Total Mistras Group, Inc. stockholders’ equity | 200,187 | 198,450 | ||||||
Non-controlling interests | 346 | 299 | ||||||
Total equity | 200,533 | 198,749 | ||||||
Total liabilities and equity | $ | 540,946 | $ | 534,904 |
Mistras Group, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Income (Loss)
(in thousands, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ | 176,030 | $ | 179,031 | $ | 344,046 | $ | 340,693 | |||||||
Cost of revenue | 120,442 | 119,980 | 236,493 | 235,738 | |||||||||||
Depreciation | 5,866 | 5,493 | 11,754 | 11,505 | |||||||||||
Gross profit | 49,722 | 53,558 | 95,799 | 93,450 | |||||||||||
Selling, general and administrative expenses | 41,484 | 40,856 | 84,305 | 82,777 | |||||||||||
Bad debt provision for troubled customers, net of recoveries | — | 289 | — | 289 | |||||||||||
Reorganization and other costs | 1,240 | (180 | ) | 3,316 | (65 | ) | |||||||||
Legal settlement and insurance recoveries, net | 150 | (153 | ) | 150 | (994 | ) | |||||||||
Research and engineering | 511 | 522 | 991 | 1,073 | |||||||||||
Depreciation and amortization | 2,443 | 2,635 | 4,969 | 5,430 | |||||||||||
Acquisition-related expense, net | 1 | 13 | 3 | 63 | |||||||||||
Income from operations | 3,893 | 9,576 | 2,065 | 4,877 | |||||||||||
Interest expense | 3,858 | 2,117 | 7,927 | 4,055 | |||||||||||
Income before provision (benefit) for income taxes | 35 | 7,459 | (5,862 | ) | 822 | ||||||||||
Provision (benefit) for income taxes | (341 | ) | 2,793 | (1,260 | ) | 1,509 | |||||||||
Net Income (Loss) | 376 | 4,666 | (4,602 | ) | (687 | ) | |||||||||
Less: net income attributable to noncontrolling interests, net of taxes | 39 | 23 | 47 | 33 | |||||||||||
Net Income (Loss) attributable to Mistras Group, Inc. | $ | 337 | $ | 4,643 | $ | (4,649 | ) | $ | (720 | ) | |||||
Earnings (loss) per common share: | |||||||||||||||
Basic | $ | 0.01 | $ | 0.15 | $ | (0.15 | ) | $ | (0.02 | ) | |||||
Diluted | $ | 0.01 | $ | 0.15 | $ | (0.15 | ) | $ | (0.02 | ) | |||||
Weighted-average common shares outstanding: | |||||||||||||||
Basic | 30,368 | 29,957 | 30,214 | 29,840 | |||||||||||
Diluted | 30,660 | 30,233 | 30,214 | 29,840 |
Mistras Group, Inc. and Subsidiaries
Unaudited Operating Data by Segment
(in thousands)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenues | |||||||||||||||
North America | $ | 145,550 | $ | 149,528 | $ | 282,482 | $ | 282,474 | |||||||
International | 30,277 | 29,610 | 59,684 | 57,748 | |||||||||||
Products and Systems | 3,329 | 2,652 | 7,068 | 5,588 | |||||||||||
Corporate and eliminations | (3,126 | ) | (2,759 | ) | (5,188 | ) | (5,117 | ) | |||||||
$ | 176,030 | $ | 179,031 | $ | 344,046 | $ | 340,693 | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Gross profit | |||||||||||||||
North America | $ | 39,679 | $ | 42,954 | $ | 76,316 | $ | 73,479 | |||||||
International | 8,398 | 9,440 | 15,766 | 17,630 | |||||||||||
Products and Systems | 1,614 | 1,157 | 3,676 | 2,325 | |||||||||||
Corporate and eliminations | 31 | 7 | 41 | 16 | |||||||||||
$ | 49,722 | $ | 53,558 | $ | 95,799 | $ | 93,450 |
Mistras Group, Inc. and Subsidiaries
Unaudited Revenues by Category
(in thousands)
Revenue by industry was as follows:
Three Months Ended June 30, 2023 | North America | International | Products | Corp/Elim | Total | ||||||||||
Oil & Gas | $ | 97,500 | $ | 8,609 | $ | 15 | $ | — | $ | 106,124 | |||||
Aerospace & Defense | 13,665 | 5,136 | 217 | — | 19,018 | ||||||||||
Industrials | 11,066 | 6,203 | 468 | — | 17,737 | ||||||||||
Power generation & Transmission | 5,459 | 1,530 | 1,167 | — | 8,156 | ||||||||||
Other Process Industries | 8,864 | 4,466 | 51 | — | 13,381 | ||||||||||
Infrastructure, Research & Engineering | 4,171 | 2,028 | 547 | — | 6,746 | ||||||||||
Petrochemical | 1,577 | 156 | — | — | 1,733 | ||||||||||
Other | 3,248 | 2,149 | 864 | (3,126 | ) | 3,135 | |||||||||
Total | $ | 145,550 | $ | 30,277 | $ | 3,329 | $ | (3,126 | ) | $ | 176,030 |
Three Months Ended June 30, 2022 | North America | International | Products | Corp/Elim | Total | ||||||||||
Oil & Gas | $ | 93,098 | $ | 8,028 | $ | 139 | $ | — | $ | 101,265 | |||||
Aerospace & Defense | 17,300 | 5,118 | 26 | — | 22,444 | ||||||||||
Industrials | 9,794 | 6,506 | 333 | — | 16,633 | ||||||||||
Power generation & Transmission | 8,378 | 1,997 | 678 | — | 11,053 | ||||||||||
Other Process Industries | 11,641 | 3,754 | 14 | — | 15,409 | ||||||||||
Infrastructure, Research & Engineering | 3,183 | 2,193 | 442 | — | 5,818 | ||||||||||
Petrochemical | 3,584 | 55 | — | — | 3,639 | ||||||||||
Other | 2,550 | 1,959 | 1,020 | (2,759 | ) | 2,770 | |||||||||
Total | $ | 149,528 | $ | 29,610 | $ | 2,652 | $ | (2,759 | ) | $ | 179,031 |
Six Months Ended June 30, 2023 | North America | International | Products | Corp/Elim | Total | ||||||||||
Oil & Gas | $ | 187,273 | $ | 17,464 | $ | 52 | $ | — | $ | 204,789 | |||||
Aerospace & Defense | 27,276 | 10,116 | 228 | — | 37,620 | ||||||||||
Industrials | 20,368 | 12,256 | 1,026 | — | 33,650 | ||||||||||
Power generation & Transmission | 10,446 | 3,187 | 2,493 | — | 16,126 | ||||||||||
Other Process Industries | 17,973 | 7,703 | 78 | — | 25,754 | ||||||||||
Infrastructure, Research & Engineering | 6,654 | 4,164 | 1,689 | — | 12,507 | ||||||||||
Petrochemical | 6,714 | 301 | — | — | 7,015 | ||||||||||
Other | 5,778 | 4,493 | 1,502 | (5,188 | ) | 6,585 | |||||||||
Total | $ | 282,482 | $ | 59,684 | $ | 7,068 | $ | (5,188 | ) | $ | 344,046 |
Six Months Ended June 30, 2022 | North America | International | Products | Corp/Elim | Total | ||||||||||
Oil & Gas | $ | 179,711 | $ | 15,600 | $ | 177 | $ | — | $ | 195,488 | |||||
Aerospace & Defense | 32,322 | 10,058 | 134 | — | 42,514 | ||||||||||
Industrials | 18,801 | 12,034 | 835 | — | 31,670 | ||||||||||
Power generation & Transmission | 12,200 | 4,559 | 1,523 | — | 18,282 | ||||||||||
Other Process Industries | 21,934 | 7,272 | 15 | — | 29,221 | ||||||||||
Infrastructure, Research & Engineering | 5,689 | 4,232 | 1,339 | — | 11,260 | ||||||||||
Petrochemical | 6,629 | 133 | — | — | 6,762 | ||||||||||
Other | 5,188 | 3,860 | 1,565 | (5,117 | ) | 5,496 | |||||||||
Total | $ | 282,474 | $ | 57,748 | $ | 5,588 | $ | (5,117 | ) | $ | 340,693 |
Mistras Group, Inc. and Subsidiaries
Unaudited Revenues by Category (continued)
(in thousands)
The Company has retrospectively reclassified certain Oil and Gas sub-category revenues for each quarterly period in 2022 in order to conform the classification with the current year presentation. Total Oil and Gas sub-category revenues were unchanged in total in each quarterly period and for the full year ended December 31, 2022. The table below presents the reclassified balances for each quarterly period in the prior year.
2022 Quarterly Revenues | |||||||||||
Three months ended March 31, | Three months ended June 30, | Three months ended September 30, | Three months ended December 31, | ||||||||
Oil and Gas Revenue by sub-category | |||||||||||
Upstream | $ | 36,397 | $ | 38,051 | $ | 35,173 | $ | 36,435 | |||
Midstream | 20,427 | 27,153 | 25,885 | 23,540 | |||||||
Downstream | 37,399 | 36,061 | 35,973 | 35,258 | |||||||
Total | $ | 94,223 | $ | 101,265 | $ | 97,031 | $ | 95,233 |
Three months ended June 30, | Six months ended June 30, | ||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
Oil and Gas Revenue by sub-category | |||||||||||
Upstream | $ | 41,961 | $ | 38,051 | $ | 78,900 | $ | 74,448 | |||
Midstream | 27,293 | 27,153 | 48,524 | 47,580 | |||||||
Downstream | 36,870 | 36,061 | 77,365 | 73,460 | |||||||
Total | $ | 106,124 | $ | 101,265 | $ | 204,789 | $ | 195,488 |
Consolidated Revenue by type was as follows:
Three months ended June 30, | Six months ended June 30, | ||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
Field Services | $ | 116,104 | $ | 121,364 | $ | 225,784 | $ | 226,859 | |||
Shop Laboratories | 14,244 | 9,916 | 27,376 | 23,005 | |||||||
Data Solutions | 18,107 | 16,236 | 34,919 | 28,635 | |||||||
Other | 27,575 | 31,515 | 55,967 | 62,194 | |||||||
Total | $ | 176,030 | $ | 179,031 | $ | 344,046 | $ | 340,693 |
Mistras Group, Inc. and Subsidiaries
Unaudited Reconciliation of
Segment and Total Company Income (Loss) from Operations (GAAP) to Income before Special Items (non-GAAP)
(in thousands)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
North America: | |||||||||||||||
Income from operations (GAAP) | $ | 12,338 | $ | 14,855 | $ | 21,715 | $ | 18,615 | |||||||
Bad debt provision for troubled customers, net of recoveries | — | 289 | — | 289 | |||||||||||
Reorganization and other costs | 478 | 1 | 539 | 28 | |||||||||||
Legal settlement and insurance recoveries, net | 150 | — | 150 | (841 | ) | ||||||||||
Acquisition-related expense, net | — | — | — | 45 | |||||||||||
Income from operations before special items (non-GAAP) | $ | 12,966 | $ | 15,145 | $ | 22,404 | $ | 18,136 | |||||||
International: | |||||||||||||||
Income (loss) from operations (GAAP) | $ | 507 | $ | 1,580 | $ | (61 | ) | $ | 1,864 | ||||||
Reorganization and other costs | 88 | (187 | ) | 195 | (99 | ) | |||||||||
Income from operations before special items (non-GAAP) | $ | 595 | $ | 1,393 | $ | 134 | $ | 1,765 | |||||||
Products and Systems: | |||||||||||||||
Income (loss) from operations (GAAP) | $ | 94 | $ | (420 | ) | $ | 478 | $ | (1,002 | ) | |||||
Income (loss) from operations (GAAP) | $ | 94 | $ | (420 | ) | $ | 478 | $ | (1,002 | ) | |||||
Corporate and Eliminations: | |||||||||||||||
Loss from operations (GAAP) | $ | (9,046 | ) | $ | (6,439 | ) | $ | (20,067 | ) | $ | (14,600 | ) | |||
Legal settlement and insurance recoveries, net | — | (153 | ) | — | (153 | ) | |||||||||
Reorganization and other costs | 674 | 6 | 2,582 | 6 | |||||||||||
Acquisition-related expense, net | 1 | 13 | 3 | 18 | |||||||||||
Loss from operations before special items (non-GAAP) | $ | (8,371 | ) | $ | (6,573 | ) | $ | (17,482 | ) | $ | (14,729 | ) | |||
Total Company: | |||||||||||||||
Income from operations (GAAP) | $ | 3,893 | $ | 9,576 | $ | 2,065 | $ | 4,877 | |||||||
Bad debt provision for troubled customers, net of recoveries | — | 289 | — | 289 | |||||||||||
Reorganization and other costs | 1,240 | (180 | ) | 3,316 | (65 | ) | |||||||||
Legal settlement and insurance recoveries, net | 150 | (153 | ) | 150 | (994 | ) | |||||||||
Acquisition-related expense, net | 1 | 13 | 3 | 63 | |||||||||||
Income from operations before special items (non-GAAP) | $ | 5,284 | $ | 9,545 | $ | 5,534 | $ | 4,170 |
Mistras Group, Inc. and Subsidiaries
Unaudited Reconciliation of
Gross Debt (GAAP) to Net Debt (non-GAAP)
(in thousands)
June 30, 2023 | December 31, 2022 | |||||||
Current portion of long-term debt | $ | 7,550 | $ | 7,425 | ||||
Long-term debt, net of current portion | 176,121 | 183,826 | ||||||
Total Gross Debt (GAAP) | 183,671 | 191,251 | ||||||
Less: Cash and cash equivalents | (17,999 | ) | (20,488 | ) | ||||
Total Net Debt (non-GAAP) | $ | 165,672 | $ | 170,763 |
Mistras Group, Inc. and Subsidiaries
Unaudited Summary Cash Flow Information
(in thousands)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net cash provided by (used in): | |||||||||||||||
Operating activities | $ | 13,888 | $ | 13,208 | $ | 18,321 | $ | 7,809 | |||||||
Investing activities | (5,351 | ) | (3,762 | ) | (9,811 | ) | (6,499 | ) | |||||||
Financing activities | (7,236 | ) | (9,379 | ) | (11,187 | ) | (5,056 | ) | |||||||
Effect of exchange rate changes on cash | (19 | ) | (1,379 | ) | 188 | (1,755 | ) | ||||||||
Net change in cash and cash equivalents | $ | 1,282 | $ | (1,312 | ) | $ | (2,489 | ) | $ | (5,501 | ) | ||||
Mistras Group, Inc. and Subsidiaries
Unaudited Reconciliation of
Net Cash Provided by Operating Activities (GAAP) to Free Cash Flow (non-GAAP)
(in thousands)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net cash provided by operating activities (GAAP) | $ | 13,888 | $ | 13,208 | $ | 18,321 | $ | 7,809 | |||||||
Less: | |||||||||||||||
Purchases of property, plant and equipment | (5,469 | ) | (3,631 | ) | (9,801 | ) | (6,692 | ) | |||||||
Purchases of intangible assets | (461 | ) | (248 | ) | (822 | ) | (399 | ) | |||||||
Free cash flow (non-GAAP) | $ | 7,958 | $ | 9,329 | $ | 7,698 | $ | 718 |
Mistras Group, Inc. and Subsidiaries
Unaudited Reconciliation of
Net Income (Loss) (GAAP) to Adjusted EBITDA (non-GAAP)
(in thousands)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net Income (loss) (GAAP) | $ | 376 | $ | 4,666 | $ | (4,602 | ) | $ | (687 | ) | |||||
Less: Net income attributable to non-controlling interests, net of taxes | 39 | 23 | 47 | 33 | |||||||||||
Net Income (loss) attributable to Mistras Group, Inc. | $ | 337 | $ | 4,643 | $ | (4,649 | ) | $ | (720 | ) | |||||
Interest expense | 3,858 | 2,117 | 7,927 | 4,055 | |||||||||||
Provision (benefit) for income taxes | (341 | ) | 2,793 | (1,260 | ) | 1,509 | |||||||||
Depreciation and amortization | 8,309 | 8,128 | 16,723 | 16,935 | |||||||||||
Share-based compensation expense | 1,091 | 1,255 | 2,633 | 2,770 | |||||||||||
Acquisition-related expense | 1 | 13 | 3 | 63 | |||||||||||
Reorganization and other related costs (benefit), net | 1,240 | (180 | ) | 3,316 | (65 | ) | |||||||||
Legal settlement and insurance recoveries, net | 150 | (153 | ) | 150 | (994 | ) | |||||||||
Bad debt provision for troubled customers, net of recoveries | — | 289 | — | 289 | |||||||||||
Foreign exchange (gain) loss | 654 | (597 | ) | 875 | 4 | ||||||||||
Adjusted EBITDA (non-GAAP) | $ | 15,299 | $ | 18,308 | $ | 25,718 | $ | 23,846 |
Mistras Group, Inc. and Subsidiaries
Unaudited Reconciliation of
Net Income (Loss) (GAAP) and Diluted EPS (GAAP) to Net Income (Loss) Excluding Special Items (non-GAAP)
and Diluted EPS Excluding Special Items (non-GAAP)
(dollars in thousands, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net income (loss) attributable to Mistras Group, Inc. (GAAP) | $ | 337 | $ | 4,643 | $ | (4,649 | ) | $ | (720 | ) | ||||||
Special items | 1,391 | (31 | ) | 3,469 | (707 | ) | ||||||||||
Tax impact on special items | (311 | ) | 24 | (815 | ) | 180 | ||||||||||
Special items, net of tax | $ | 1,080 | $ | (7 | ) | $ | 2,654 | $ | (527 | ) | ||||||
Net income (loss) attributable to Mistras Group, Inc. Excluding Special Items (non-GAAP) | $ | 1,417 | $ | 4,636 | $ | (1,995 | ) | $ | (1,247 | ) | ||||||
Diluted EPS (GAAP)(1) | $ | 0.01 | $ | 0.15 | $ | (0.15 | ) | $ | (0.02 | ) | ||||||
Special items, net of tax | 0.04 | — | 0.09 | (0.02 | ) | |||||||||||
Diluted EPS Excluding Special Items (non-GAAP) | $ | 0.05 | $ | 0.15 | $ | (0.06 | ) | $ | (0.04 | ) |
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(1) For the six months ended June 30, 2023 and 2022, 1,106,595 shares and 1,412,073 shares related to restricted stock were excluded from the calculation of diluted EPS due to the net loss for the period.
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