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Mistras Group, Inc. Announces Fiscal 2013 Results

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Mistras Group, Inc. Announces Fiscal 2013 Results

Aug 7, 2013

PRINCETON JUNCTION, N.J., Aug. 7, 2013 (GLOBE NEWSWIRE) -- Mistras Group, Inc. (NYSE:MG), a leading "one source" global provider of technology-enabled asset protection solutions, today reported fiscal 2013 fourth quarter and full year results. Results for the full year of fiscal 2013 include revenue of $529.3 million, and net income of $11.6 million, or $0.40 per share. The fourth quarter results include revenue of $144.5 million and a net loss of $4.5 million, or ($0.16) per share. Both the fourth quarter and full year were impacted by a $9.9 million goodwill impairment charge discussed below.

Summary financial highlights for the fiscal 2013 fourth quarter and full year:

  • Adjusted EBITDA of $16.5 million in the fourth quarter and $68.3 million for the full year.
     
  • Adjusted Diluted Earnings Per Share of $0.16 in the fourth quarter and $0.70 for the full year, which excludes the impact of the goodwill impairment charge and acquisition related expense, net. 
     
  • 21% revenue growth in fiscal 2013, including 6% organic growth for the Services segment. 
     
  • Net Cash Provided by Operating Activities of $43.5 million for the fiscal year, a 39% increase over the prior year. 
     
  • During the quarter, the Company recognized a goodwill impairment charge related to its operations in Brazil totaling approximately $9.9 million, which reduced EPS by approximately $0.34 per share in the fourth quarter and full year.

Outlook and Guidance for Fiscal 2014

Consistent with the guidance communicated during its June 26, 2013 conference call, the Company expects 2014 revenues to be in the range of $570 million to $600 million and Adjusted EBITDA to be in the range of $74 million to $80 million. The Company does not provide quarterly guidance, but expects to update its annual guidance at least quarterly.

Sotirios Vahaviolos, Mistras Chairman and Chief Executive Officer stated "The difficult economic environments in Europe and Brazil, as well as a tight market in the U.S. resulted in a disappointing finish for fiscal 2013. However, despite the weaker fourth quarter, we still had good profitable results for the year. We are encouraged by the 6% organic growth of our Services business under an adverse competitive U.S. marketplace in fiscal 2013, which, combined with the award of new evergreen contracts in Europe, positions us for a good start and strong finish for fiscal 2014."

Conference Call

In connection with this release, Mistras will hold a conference call on Thursday, August 8, 2013 at 9:00 a.m. (Eastern). The call will be broadcast over the Web and can be accessed on Mistras' Website, www.mistrasgroup.com. Individuals in the U.S. wishing to participate in the conference call by phone may call 1-866-515-2909 and use confirmation code 76981828 when prompted. The International dial-in number is 1-617-399-5123.

About Mistras Group, Inc.

Mistras offers one of the broadest "one source" services and technology-enabled asset protection solution portfolios in the industry used to evaluate the structural integrity of energy, industrial and public infrastructure. Mission critical services and solutions are delivered globally and provide customers with the ability to extend the useful life of their assets, improve productivity and profitability, comply with government safety and environmental regulations and enhance risk management operational decisions.

Mistras uniquely combines its industry leading products and technologies - 24/7 on-line monitoring of critical assets; mechanical integrity ("MI") and non-destructive testing ("NDT") services; and its proprietary world class data warehousing and analysis software - to provide comprehensive and competitive products, systems and services solutions from a single source provider.

For more information, please visit the company's website at www.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 Annual Report on Form 10-K for fiscal year 2012 filed with the Securities and Exchange Commission on August 14, 2012, 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

The terms "Adjusted EBITDA" and "Adjusted Diluted Earnings Per Share" used in this release are financial measurements not calculated in accordance with generally accepted accounting principles in the U.S. ("GAAP"). Reconciliations of Adjusted EBITDA and Adjusted Diluted Earnings Per Share to financial measurements under GAAP are set forth in a table attached to this press release. In addition, the Company has also included in the tables for non-GAAP measurements the non-GAAP measurement "Adjusted Net Income" reconciling this measurement to a financial measurement under GAAP. The Company believes that investors and other users of the financial statements benefit from the presentation of Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted Earnings Per Share because they provide additional metrics to compare the Company's operating performance on a consistent basis and measure underlying trends and results of the Company's business.

     
Mistras Group, Inc. and Subsidiaries
Unaudited Consolidated Balance Sheets
(in thousands, except share and per share data)
     
  May 31, 
 20132012
 ASSETS   
 Current Assets     
 Cash and cash equivalents   $ 7,802  $ 8,410
 Accounts receivable, net   108,554  104,515
 Inventories   12,504  12,492
 Deferred income taxes   2,621  1,885
 Prepaid expenses and other current assets   8,156  6,321
Total current assets  139,637  133,623
Property, plant and equipment, net  68,419  63,527
Intangible assets, net  52,428  34,469
Other assets  906  1,378
Goodwill  115,270  96,819
Total assets  $ 376,660  $ 329,816
     
LIABILITIES AND EQUITY    
Current Liabilities    
Accounts payable  $ 8,490  $ 11,944
Accrued expenses and other current liabilities  47,839  39,334
Current portion of long-term debt  7,418  5,971
Current portion of capital lease obligations  6,766  5,951
Income taxes payable  1,703  1,119
Total current liabilities  72,216  64,319
Long-term debt, net of current portion  52,849  34,258
Obligations under capital leases, net of current portion  10,923  13,094
Deferred income taxes  11,614  4,901
Other long-term liabilities  18,778  19,996
Total liabilities  166,380  136,568
     
Commitments and contingencies    
     
Equity    
Preferred stock, 10,000,000 shares authorized  --   -- 
Common stock, $0.01 par value, 200,000,000 shares authorized, 28,210,862 and 28,025,507 shares issued and outstanding as of May 31, 2013 and May 31, 2012, respectively  282  280
Additional paid-in capital  195,241  188,443
Retained earnings  18,982  7,336
Accumulated other comprehensive loss  (4,452)  (3,047)
Total Mistras Group, Inc. stockholders' equity  210,053  193,012
Noncontrolling interests  227  236
Total equity  210,280  193,248
Total liabilities and equity  $ 376,660  $ 329,816
         
Mistras Group, Inc. and Subsidiaries
Unaudited Consolidated Statements of Operations
(in thousands, except per share data)
         
  Three months ended  Years ended 
 May 31, 2013May 31, 2012May 31, 2013May 31, 2012
Revenues:        
Services  $ 135,802  $ 112,938  $ 487,268  $ 394,035
Products and systems  8,703  14,152  42,014  42,840
Total revenues  144,505  127,090  529,282  436,875
Cost of revenues:        
Cost of services  98,000  77,406  346,769  271,676
Cost of products and systems sold  3,254  7,846  16,276  19,940
Depreciation related to services  4,398  4,290  16,963  14,929
Depreciation related to products and systems  310  77  903  640
Total cost of revenues  105,962  89,619  380,911  307,185
Gross profit  38,543  37,471  148,371  129,690
Selling, general and administrative expenses  27,729  23,533  101,792  83,098
Research and engineering  646  290  2,447  2,059
Depreciation and amortization  2,246  1,668  8,781  6,455
Acquisition-related expense, net  (1,135)  971  (2,141)  1,980
Goodwill impairment  9,938  --   9,938  -- 
Income (loss) from operations  (881)  11,009  27,554  36,098
Other expenses        
Interest expense  830  1,011  3,288  3,132
Gain on extinguishment of long-term debt  --   (784)  --   (671)
Income (loss) before provision for income taxes   (1,711)  10,782  24,266  33,637
Provision for income taxes  2,878  3,619  12,627  12,291
Net income (loss)  (4,589)  7,163  11,639  21,346
         
Net (income) loss attributable to noncontrolling interests, net of taxes  40  (31)  7  7
Net income (loss) attributable to Mistras Group, Inc.  $ (4,549)  $ 7,132  $ 11,646  $ 21,353
Earnings (net loss) per common share:        
Basic  $ (0.16)  $ 0.25  $ 0.41  $ 0.77
Diluted  $ (0.16)  $ 0.25  $ 0.40  $ 0.74
Weighted average common shares outstanding:        
Basic  28,202  27,972  28,141  27,839
Diluted  28,202  28,935  29,106  28,685
         
Mistras Group, Inc. and Subsidiaries
Unaudited Operating Data by Segment
(in thousands)
         
  Three months ended May 31,  Year ended May 31, 
 2013201220132012
         
 Revenues         
 Services   $ 102,704  $ 96,300  $ 380,851  $ 349,793
 International   38,118  20,672  126,840  59,466
 Products and Systems   7,683  13,654  33,301  40,083
 Corporate and eliminations   (4,000)  (3,536)  (11,710)  (12,467)
   $ 144,505  $ 127,090  $ 529,282  $ 436,875
         
         
  Three months ended May 31,  Year ended May 31, 
 2013201220132012
     
 Gross profit         
 Services   $ 26,779  $ 26,412  $ 98,907  $ 94,413
 International   8,088  6,843  32,319  19,106
 Products and Systems   3,937  5,626  16,947  18,578
 Corporate and eliminations   (261)  (1,410)  198  (2,407)
   $ 38,543  $ 37,471  $ 148,371  $ 129,690
         
Mistras Group, Inc. and Subsidiaries
Unaudited Reconciliation of Net Income Attributable to Mistras Group, Inc. to EBITDA and Adjusted EBITDA
(in thousands)
         
  Three months ended May 31,  Year ended May 31, 
 2013201220132012
EBITDA and Adjusted EBITDA data  
Net income (loss) attributable to Mistras Group, Inc. (GAAP)  $ (4,549)  $ 7,132  $ 11,646  $ 21,353
Interest expense   830  1,011  3,288  3,132
Provision for income taxes   2,878  3,619  12,627  12,291
Depreciation and amortization   6,954  6,035  26,647  22,024
EBITDA (non-GAAP)  6,113  17,797  54,208  58,800
Stock compensation expense   1,536  1,306  6,285  5,097
Acquisition-related expense, net  (1,135)  971  (2,141)  1,980
Goodwill impairment  9,938  --   9,938  -- 
Gain on extinguishment of debt   --   (784)  --   (671)
Adjusted EBITDA (non-GAAP)  $ 16,452  $ 19,290  $ 68,290  $ 65,206
         
Mistras Group, Inc. and Subsidiaries
Unaudited Reconciliation of Net Income Attributable to Mistras Group, Inc. (GAAP) to Adjusted Net Income and Adjusted Diluted Earnings Per Share (Non-GAAP)
(in thousands, except per share data)
         
  Three months ended May 31,  Year ended May 31, 
 2013201220132012
Adjusted Net Income        
Net income (loss) attributable to Mistras Group, Inc. (GAAP)  $ (4,549)  $ 7,132  $ 11,646  $ 21,353
Acquisition-related expense, net ($1.1 million benefit and $1.0 million expense, pre-tax, for the three months ended May 31, 2013 and 2012, respectively and $2.1 million benefit and $2.0 million expense, pretax, for the year ended May 31, 2013 and 2012, respectively)  (738)  645  (1,351)  1,257
Goodwill impairment  9,938  --   9,938  -- 
Gain on extinguishment of long-term debt ($0.8 million and $0.7 million, pre-tax for the three months and year ended May 31, 2012, respectively)  --   (521)  --   (426)
Adjusted Net Income (non-GAAP)  $ 4,651  $ 7,256  $ 20,233  $ 22,184
         
Adjusted Diluted Earnings Per Share        
Diluted earnings (loss) per common share (GAAP)  $ (0.16)  $ 0.25  $ 0.40  $ 0.74
Acquisition-related expense  (0.03)  0.02  (0.04)  0.04
Goodwill impairment  0.35  --   0.34  -- 
Gain on extinguishment of long-term debt  --   (0.02)  --   (0.01)
Adjusted Diluted Earnings Per Share (non-GAAP)  $ 0.16  $ 0.25  $ 0.70  $ 0.77
CONTACT: Nestor S. Makarigakis,

         Manager of Marketing Communications

         marcom@mistrasgroup.com

         1(609)716-4000