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Mistras Group's Second Quarter Results Demonstrate Continued Strong Growth in Revenue and Profit

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Mistras Group's Second Quarter Results Demonstrate Continued Strong Growth in Revenue and Profit

Jan 9, 2012

PRINCETON JUNCTION, N.J., Jan. 9, 2012 (GLOBE NEWSWIRE) -- Mistras Group, Inc. (NYSE:MG), a leading "one source" global provider of technology-enabled asset protection solutions, today reported financial results for the fiscal 2012 second quarter ending November 30, 2011. Revenue for the second quarter was $114.2 million, an increase of 29%, over the $88.8 million reported in the second quarter of fiscal 2011. Adjusted EBITDA*, a non-GAAP measure detailed later in this release, increased 29% to $20.6 million in the second quarter of fiscal 2012 versus $15.9 million in the second quarter of fiscal 2011. Net income for the second quarter of fiscal 2012 grew by 40% to $8.0 million, or $0.28 per diluted share, versus $5.7 million, or $0.21 per diluted share, in the second quarter of fiscal 2011. During the quarter the Company recorded a $0.3 million pre-tax benefit from acquisition related activities which increased diluted earnings per share by approximately $0.01.

Consistent with prior quarters, organic growth contributed the bulk of the revenue gain. In the second quarter of fiscal 2012 the organic growth rate was 19%, followed by acquisition growth of 9% and the balance due to foreign currency fluctuations. Also consistent with prior quarters, the second quarter revenue gain was achieved across a broad range of target markets.

Additional Financial Highlights for the Fiscal 2012 second quarter and 6 month period:

  • In the first six months of fiscal 2012, revenues grew by 31% to $205.7 million, adjusted EBITDA grew by 33% to $32.5 million, and net income grew by 54% to $11.2 million, or $0.39 per diluted share.
  • Operating income margins rose in both the second quarter and the first six months of fiscal 2012, increasing to 9.7% of revenues in the first six months of fiscal 2012, versus 8.6% in the prior year.
  • SG&A as a percent of revenues declined in both the second quarter and first six months of fiscal 2012, declining to 18.8% of revenues in the first six months of fiscal 2012, versus 19.8 % in the prior year.
  • After the quarter close, the Company replaced its existing revolving credit facility with a new five-year, $125.0 million facility which matures in December 2016.

Chairman and Chief Executive Officer Dr. Sotirios J. Vahaviolos stated that, "I am pleased with the momentum of our business in the second quarter, as we achieved new highs in Revenue, Adjusted EBITDA, Net Income and EPS. Once again, our 19% organic revenue growth rate was a significant driver behind our results."

Business Outlook/Guidance for Fiscal Year 2012

The Company's outlook is for continued double digit growth in revenue and Adjusted EDITDA*. Based on the results of the first six months of fiscal 2012, the Company is raising its previously issued guidance and now projects its fiscal 2012 revenues to be in the range of $400 million to $415 million, up from the previous range of $375 million to $390 million, and Adjusted EBITDA* to be in the range of $64 million to $68 million, up from the previous range of $59 million to $64 million. Mistras does not provide specific guidance for individual quarters, but will reaffirm or update its annual guidance at least quarterly.

Dr. Vahaviolos concluded, "We are pleased with the positive developments that we have seen in many of our end markets thus far in the year and we expect that our unique approach of providing 'One Source Asset Protection Solutions' to our customers will continue to receive broad acceptance worldwide for the remainder of this year and beyond."

Earnings Conference Call

In connection with this earnings release, Mistras will hold its quarterly conference call on Monday, January 9, 2012 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 1-866-730-5762 and use confirmation code 47865317 when prompted. The International dial-in number is 1-857-350-1586.

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 or contact Frank Joyce, Chief Financial Officer at 609-716-4103.

The MISTRAS Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6966

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. 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 filed with the Securities and Exchange Commission on August 12, 2011, as updated by the Company's 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 term "Adjusted EBITDA" is a financial measurement not calculated in accordance with U.S. generally accepted accounting principles.  The Company believes that investors and other users of the financial statements benefit from the presentation of Adjusted EBITDA because it provides an additional metric to compare the Company's operating performance on a consistent basis and measure underlying trends and results of the Company's business.  A reconciliation of Adjusted EBITDA to a financial measurement under GAAP is set forth in a table attached to this press release.

Mistras Group, Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except share data)
     
 November 30, 2011May 31, 2011
 ASSETS   
 Current Assets     
 Cash and cash equivalents   $ 5,319  $ 10,879
 Restricted cash   3,700  -- 
 Accounts receivable, net   102,782  78,031
 Inventories, net   10,997  9,830
 Deferred income taxes   1,280  1,278
 Prepaid expenses and other current assets   8,305  6,761
Total current assets  132,383  106,779
Property, plant and equipment, net  54,216  49,168
Intangible assets, net  27,826  27,304
Goodwill  71,814  64,146
Other assets  1,323  1,240
Total assets  $ 287,562  $ 248,637
     
LIABILITIES, PREFERRED STOCK AND EQUITY    
Current Liabilities    
Current portion of long-term debt  $ 5,733  $ 7,226
Current portion of capital lease obligations  6,339  5,853
Accounts payable  6,171  6,656
Accrued expenses and other current liabilities  33,118  28,028
Income taxes payable  1,925  2,825
Total current liabilities  53,286  50,588
Long-term debt, net of current portion  34,191  14,625
Obligations under capital leases, net of current portion  12,283  9,623
Deferred income taxes  2,916  2,863
Other long-term liabilities  3,702  3,452
Total liabilities  106,378  81,151
     
Commitments and contingencies    
Preferred stock, 10,000,000 shares authorized  --   -- 
Equity     
Common stock, $0.01 par value, 200,000,000 shares authorized, 27,916,036 and 27,667,122 shares issued and outstanding as of November 30, 2011 and May 31, 2011, respectively  279  277
Additional paid-in capital  184,553  180,594
Accumulated deficit  (2,833)  (14,017)
Accumulated other comprehensive (loss) income  (1,065)  303
Total Mistras Group, Inc. stockholders' equity  180,934  167,157
Noncontrolling interest  250  329
Total equity  181,184  167,486
Total liabilities, preferred stock and equity  $ 287,562  $ 248,637
 
Mistras Group, Inc.
Unaudited Consolidated Statement of Operations
(in thousands, except per share data)
         
  Three months ended November 30,  Six months ended November 30, 
 2011201020112010
Revenues:        
Services  $ 103,942  $ 82,953  $ 186,844  $ 144,205
Products  10,278  5,884  18,823  13,042
Total revenues  114,220  88,837  205,667  157,247
Cost of revenues:        
Cost of services  71,047  55,667  127,934  97,058
Cost of products sold  4,216  2,067  7,856  5,344
Depreciation related to services  3,556  3,136  6,879  5,945
Depreciation related to products  186  159  363  314
Total cost of revenues  79,005  61,029  143,032  108,661
Gross profit  35,215  27,808  62,635  48,586
Selling, general and administrative expenses  19,378  15,615  38,759  31,094
Research and engineering  602  569  1,191  1,124
Depreciation and amortization  1,503  1,326  2,982  2,504
Acquisition-related costs  (339)  --   (339)  -- 
Legal reserve  --   101  --   351
Income from operations  14,071  10,197  20,042  13,513
Other expenses        
Interest expense  1,145  671  1,806  1,361
Income before provision for income taxes   12,926  9,526  18,236  12,152
Provision for income taxes  5,008  3,818  7,124  4,872
Net income  7,918  5,708  11,112  7,280
Net loss (income) attributable to noncontrolling interests, net of taxes  38  (30)  72  (10)
Net income attributable to Mistras Group, Inc.  $ 7,956  $ 5,678  $ 11,184  $ 7,270
Earnings per common share:        
Basic  $ 0.29  $ 0.21  $ 0.40  $ 0.27
Diluted  $ 0.28  $ 0.21  $ 0.39  $ 0.27
Weighted average common shares outstanding:        
Basic  27,786  26,665  27,731  26,664
Diluted  28,600  26,816  28,417  26,795
 
Mistras Group, Inc.
Unaudited Operating Data by Segment
(in thousands)
         
  Three months ended November 30,  Six months ended November 30, 
 2011201020112010
     
 Revenues         
 Services   $ 96,909  $ 76,108  $ 172,598  $ 131,390
 Products and Systems   9,092  5,228  16,605  10,538
 International   11,857  9,350  21,630  18,390
 Corporate and eliminations   (3,638)  (1,849)  (5,166)  (3,071)
   $ 114,220  $ 88,837  $ 205,667  $ 157,247
         
  Three months ended November 30,  Six months ended November 30, 
 2011201020112010
     
 Gross profit         
 Services   $ 27,053  $ 21,753  $ 47,361  $ 36,754
 Products and Systems   4,263  2,821  8,014  5,390
 International   4,246  3,260  7,677  6,531
 Corporate and eliminations   (347)  (26)  (417)  (89)
   $ 35,215  $ 27,808  $ 62,635  $ 48,586
 
Mistras Group, Inc.
Unaudited Reconciliation of
Net Income Attributable to Mistras Group, Inc. to EBITDA and Adjusted EBITDA
(in thousands)
         
  Three months ended November 30,  Six months ended November 30, 
 2011201020112010
EBITDA and Adjusted EBITDA data    
Net income attributable to Mistras Group, Inc.  $ 7,956  $ 5,678  $ 11,184  $ 7,270
Interest expense   1,145  671  1,806  1,361
Provision for income taxes   5,008  3,818  7,124  4,872
Depreciation and amortization   5,245  4,621  10,224  8,763
EBITDA   $ 19,354  $ 14,788  $ 30,338  $ 22,266
Stock Compensation  1,545  1,047  2,547  1,776
Acquisition-related costs  (339)  --   (339)  -- 
Legal reserve  --   101  --   351
Adjusted EBITDA   $ 20,560  $ 15,936  $ 32,546  $ 24,393
CONTACT: Nestor S. Makarigakis

         Manager of Marketing Communications

         marcom@mistrasgroup.com

         1(609)716-4000