UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 7, 2017
Mistras Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware | 001- 34481 | 22-3341267 | ||
(State or other jurisdiction | (Commission | (IRS Employer | ||
of incorporation) | File Number) | Identification No.) | ||
195 Clarksville Road | ||
Princeton Junction, New Jersey | 08550 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (609) 716-4000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d 2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 8.01. Other Events
As previously disclosed in its Current Report on Form 8-K filed with the Securities and Exchange Commission on January 4, 2017, Mistras Group, Inc. (the "Company") announced the change in its fiscal year from May 31 to December 31, effective December 31, 2016. Selected historical quarterly financial information for the year ended December 31, 2016 is included in the exhibit to this report.
This Form 8-K supersedes certain information from our Current Report on Form 8-K filed on March 16, 2017 and should be read in conjunction with our Current Report on Form 8-K filed on May 8, 2017. The information contained in Exhibit 99.1 is being furnished, not filed.
Item 9.01. Financial Statement and Exhibits
(d) Exhibits
99.1 Supplemental unaudited quarterly financial information for the year ended December 31, 2016
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
MISTRAS GROUP, INC. | |||
Date: July 7, 2017 | By: | /s/ Michael C. Keefe | |
Name: | Michael C. Keefe | ||
Title: | Executive Vice President, General Counsel and Secretary | ||
Exhibit No. | Description | ||
99.1 | Supplemental unaudited quarterly financial information for the year ended December 31, 2016 | ||
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Exhibit 99.1
Mistras Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited) | (unaudited) | |||||||||||
June 30, 2016 | September 30, 2016 | December 31, 2016 | ||||||||||
ASSETS | ||||||||||||
Current Assets | ||||||||||||
Cash and cash equivalents | $ | 18,442 | $ | 16,509 | $ | 19,154 | ||||||
Accounts receivable, net | 133,851 | 131,382 | 130,852 | |||||||||
Inventories | 10,285 | 10,448 | 10,017 | |||||||||
Deferred income taxes | 6,192 | 6,042 | 6,230 | |||||||||
Prepaid expenses and other current assets | 12,786 | 15,087 | 16,399 | |||||||||
Total current assets | 181,556 | 179,468 | 182,652 | |||||||||
Property, plant and equipment, net | 77,542 | 76,630 | 73,149 | |||||||||
Intangible assets, net | 42,402 | 40,839 | 40,007 | |||||||||
Goodwill | 168,408 | 169,062 | 169,940 | |||||||||
Deferred income taxes | 982 | 972 | 1,086 | |||||||||
Other assets | 2,307 | 2,376 | 2,593 | |||||||||
Total assets | $ | 473,197 | $ | 469,347 | $ | 469,427 | ||||||
LIABILITIES AND EQUITY | ||||||||||||
Current Liabilities | ||||||||||||
Accounts payable | $ | 8,552 | $ | 8,021 | $ | 6,805 | ||||||
Accrued expenses and other current liabilities | 62,162 | 57,336 | 58,697 | |||||||||
Current portion of long-term debt | 12,329 | 2,030 | 1,379 | |||||||||
Current portion of capital lease obligations | 7,573 | 6,779 | 6,488 | |||||||||
Income taxes payable | 2,090 | 2,543 | 4,342 | |||||||||
Total current liabilities | 92,706 | 76,709 | 77,711 | |||||||||
Long-term debt, net of current portion | 67,169 | 71,483 | 85,917 | |||||||||
Obligations under capital leases, net of current portion | 11,821 | 11,276 | 9,682 | |||||||||
Deferred income taxes | 18,165 | 20,246 | 17,584 | |||||||||
Other long-term liabilities | 6,597 | 7,233 | 7,789 | |||||||||
Total liabilities | 196,458 | 186,947 | 198,683 | |||||||||
Commitments and contingencies | ||||||||||||
Equity | ||||||||||||
Preferred stock, 10,000,000 shares authorized | — | — | — | |||||||||
Common stock, $0.01 par value, 200,000,000 shares authorized, 28,940,455; 29,186,350; and 29,216,735 shares issued | 290 | 293 | 292 | |||||||||
Additional paid-in capital | 214,189 | 215,237 | 217,211 | |||||||||
Treasury stock, at cost, 0; 0; and 420,258 shares | — | — | (9,000 | ) | ||||||||
Retained earnings | 83,602 | 90,840 | 91,803 | |||||||||
Accumulated other comprehensive loss | (21,468 | ) | (24,108 | ) | (29,724 | ) | ||||||
Total Mistras Group, Inc. stockholders’ equity | 276,613 | 282,262 | 270,582 | |||||||||
Noncontrolling interests | 126 | 138 | 162 | |||||||||
Total equity | 276,739 | 282,400 | 270,744 | |||||||||
Total Liabilities and Equity | $ | 473,197 | $ | 469,347 | $ | 469,427 | ||||||
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Mistras Group, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share data)
Three months ended | Six months ended | Nine months ended | Year ended | |||||||||||||||||||||
June 30, 2016 | September 30, 2016 | December 31, 2016 | June 30, 2016 | September 30, 2016 | December 31, 2016 | |||||||||||||||||||
Revenue | $ | 178,340 | $ | 168,811 | $ | 170,156 | $ | 345,795 | $ | 514,606 | $ | 684,762 | ||||||||||||
Cost of revenue | 121,044 | 112,754 | 116,902 | 239,273 | 352,027 | 468,929 | ||||||||||||||||||
Depreciation | 5,761 | 5,406 | 5,276 | 11,017 | 16,423 | 21,699 | ||||||||||||||||||
Gross profit | 51,535 | 50,651 | 47,978 | 95,505 | 146,156 | 194,134 | ||||||||||||||||||
Selling, general and administrative expenses | 37,217 | 34,995 | 41,648 | 72,271 | 107,266 | 148,914 | ||||||||||||||||||
Research and engineering | 623 | 643 | 742 | 1,285 | 1,928 | 2,670 | ||||||||||||||||||
Depreciation and amortization | 2,865 | 2,513 | 2,549 | 5,627 | 8,140 | 10,689 | ||||||||||||||||||
Legal settlement | 6,320 | — | — | 6,320 | 6,320 | 6,320 | ||||||||||||||||||
Acquisition-related expense (benefit), net | (330 | ) | 384 | 94 | (483 | ) | (99 | ) | (5 | ) | ||||||||||||||
Income from operations | 4,840 | 12,116 | 2,945 | 10,485 | 22,601 | 25,546 | ||||||||||||||||||
Interest expense | 340 | 778 | 857 | 1,440 | 2,218 | 3,075 | ||||||||||||||||||
Income before provision for income taxes | 4,500 | 11,338 | 2,088 | 9,045 | 20,383 | 22,471 | ||||||||||||||||||
Provision for income taxes | 1,737 | 4,083 | 1,100 | 2,825 | 6,908 | 8,008 | ||||||||||||||||||
Net income | 2,763 | 7,255 | 988 | 6,220 | 13,475 | 14,463 | ||||||||||||||||||
Less: net income attributable to noncontrolling interests, net of taxes | 2 | 17 | 25 | 12 | 29 | 54 | ||||||||||||||||||
Net income attributable to Mistras Group, Inc. | $ | 2,761 | $ | 7,238 | $ | 963 | $ | 6,208 | $ | 13,446 | $ | 14,409 | ||||||||||||
Earnings per common share | ||||||||||||||||||||||||
Basic | $ | 0.10 | $ | 0.25 | $ | 0.03 | $ | 0.21 | $ | 0.46 | $ | 0.50 | ||||||||||||
Diluted | $ | 0.09 | $ | 0.24 | $ | 0.03 | $ | 0.21 | $ | 0.45 | $ | 0.48 | ||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||||||
Basic | 28,932 | 29,051 | 28,943 | 28,924 | 28,966 | 28,960 | ||||||||||||||||||
Diluted | 30,152 | 30,231 | 29,920 | 30,083 | 30,139 | 30,114 | ||||||||||||||||||
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Mistras Group, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Six months ended June 30, 2016 | Nine months ended September 30, 2016 | Year ended December 31, 2016 | |||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | 6,220 | $ | 13,475 | $ | 14,463 | |||||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||
Depreciation and amortization | 16,644 | 24,563 | 32,388 | ||||||||
Deferred income taxes | (1,655 | ) | 512 | (1,775 | ) | ||||||
Share-based compensation expense | 3,195 | 5,161 | 7,324 | ||||||||
Fair value adjustments to contingent consideration | (933 | ) | (582 | ) | (697 | ) | |||||
Other | (1,075 | ) | (2,017 | ) | 600 | ||||||
Changes in operating assets and liabilities, net of effect of acquisitions: | |||||||||||
Accounts receivable | 7,930 | 9,968 | 8,092 | ||||||||
Inventories | 237 | 200 | 608 | ||||||||
Prepaid expenses and other assets | (449 | ) | (2,777 | ) | (4,645 | ) | |||||
Accounts payable | (1,271 | ) | (1,761 | ) | (2,792 | ) | |||||
Accrued expenses and other liabilities | 9,337 | 5,247 | 7,509 | ||||||||
Income taxes payable | (402 | ) | 120 | 2,136 | |||||||
Net cash provided by operating activities | 37,778 | 52,109 | 63,211 | ||||||||
Cash flows from investing activities | |||||||||||
Purchase of property, plant and equipment | (6,787 | ) | (11,238 | ) | (14,452 | ) | |||||
Purchase of intangible assets | (829 | ) | (1,106 | ) | (1,421 | ) | |||||
Acquisition of businesses, net of cash acquired | (33 | ) | (1,200 | ) | (8,287 | ) | |||||
Proceeds from sale of equipment | 281 | 1,057 | 1,752 | ||||||||
Net cash used in investing activities | (7,368 | ) | (12,487 | ) | (22,408 | ) | |||||
Cash flows from financing activities | |||||||||||
Repayment of capital lease obligations | (4,221 | ) | (6,703 | ) | (9,305 | ) | |||||
Proceeds from borrowings of long-term debt | 648 | 761 | 1,034 | ||||||||
Repayment of long-term debt | (1,645 | ) | (12,187 | ) | (13,364 | ) | |||||
Proceeds from revolver | 15,100 | 38,200 | 63,000 | ||||||||
Repayments of revolver | (30,100 | ) | (49,000 | ) | (58,700 | ) | |||||
Payment of contingent consideration for business acquisitions | (2,123 | ) | (2,919 | ) | (2,925 | ) | |||||
Purchases of treasury stock | — | — | (9,000 | ) | |||||||
Taxes paid related to net share settlement of equity awards | (62 | ) | (2,146 | ) | (2,378 | ) | |||||
Excess tax benefit from share-based payment compensation | 129 | 646 | 698 | ||||||||
Proceeds from the exercise of stock options | 323 | 857 | 909 | ||||||||
Net cash used in financing activities | (21,951 | ) | (32,491 | ) | (30,031 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | 384 | (221 | ) | (1,217 | ) | ||||||
Net change in cash and cash equivalents | 8,843 | 6,910 | 9,555 | ||||||||
Cash and cash equivalents | |||||||||||
Beginning of period | 9,599 | 9,599 | 9,599 | ||||||||
End of period | $ | 18,442 | $ | 16,509 | $ | 19,154 | |||||
Supplemental disclosure of cash paid | |||||||||||
Interest | $ | 1,484 | $ | 2,454 | $ | 3,174 | |||||
Income taxes | $ | 4,502 | $ | 9,562 | $ | 12,364 | |||||
Noncash investing and financing | |||||||||||
Equipment acquired through capital lease obligations | $ | 6,229 | $ | 7,408 | $ | 8,320 | |||||
Issuance of notes payable and other debt obligations primarily related to acquisitions | $ | 325 | $ | 325 | $ | 325 | |||||
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Mistras Group, Inc. and Subsidiaries
Unaudited Reconciliation of Net Income to Adjusted EBITDA and Unaudited Segment Data
(in thousands)
Three months ended | Six months ended | Nine months ended | Year ended | ||||||||||||||||||||
June 30, 2016 | September 30, 2016 | December 31, 2016 | June 30, 2016 | September 30, 2016 | December 31, 2016 | ||||||||||||||||||
Net income | $ | 2,763 | $ | 7,255 | $ | 988 | $ | 6,220 | $ | 13,475 | $ | 14,463 | |||||||||||
Less: net income attributable to noncontrolling interests, net of taxes | 2 | 17 | 25 | 12 | 29 | 54 | |||||||||||||||||
Net income attributable to Mistras Group, Inc. | 2,761 | 7,238 | 963 | 6,208 | 13,446 | 14,409 | |||||||||||||||||
Interest expense | 340 | 778 | 857 | 1,440 | 2,218 | 3,075 | |||||||||||||||||
Provision for income taxes | 1,737 | 4,083 | 1,100 | 2,825 | 6,908 | 8,008 | |||||||||||||||||
Depreciation and amortization | 8,626 | 7,919 | 7,825 | 16,644 | 24,563 | 32,388 | |||||||||||||||||
Share-based compensation expense | 1,466 | 1,966 | 2,163 | 3,195 | 5,161 | 7,324 | |||||||||||||||||
Acquisition-related expense (benefit), net | (330 | ) | 384 | 94 | (483 | ) | (99 | ) | (5 | ) | |||||||||||||
Severance | 673 | 265 | 433 | 727 | 992 | 1,425 | |||||||||||||||||
Asset write-offs and lease terminations | — | — | 1,042 | — | — | 1,042 | |||||||||||||||||
Foreign exchange (gain) loss | (237 | ) | (835 | ) | (107 | ) | (519 | ) | (1,354 | ) | (1,461 | ) | |||||||||||
Legal settlement | 6,320 | — | — | 6,320 | 6,320 | 6,320 | |||||||||||||||||
Adjusted EBITDA | $ | 21,356 | $ | 21,798 | $ | 14,370 | $ | 36,357 | $ | 58,155 | $ | 72,525 | |||||||||||
Three months ended | Six months ended | Nine months ended | Year ended | ||||||||||||||||||||
June 30, 2016 | September 30, 2016 | December 31, 2016 | June 30, 2016 | September 30, 2016 | December 31, 2016 | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Services | $ | 136,358 | $ | 127,153 | $ | 124,289 | $ | 267,936 | $ | 395,089 | $ | 519,378 | |||||||||||
International | 36,373 | 37,922 | 43,486 | 67,353 | 105,275 | 148,761 | |||||||||||||||||
Products and Systems | 6,467 | 6,807 | 6,094 | 13,148 | 19,955 | 26,049 | |||||||||||||||||
Corporate and eliminations | (858 | ) | (3,071 | ) | (3,713 | ) | (2,642 | ) | (5,713 | ) | (9,426 | ) | |||||||||||
$ | 178,340 | $ | 168,811 | $ | 170,156 | $ | 345,795 | $ | 514,606 | $ | 684,762 | ||||||||||||
Three months ended | Six months ended | Nine months ended | Year ended | ||||||||||||||||||||
June 30, 2016 | September 30, 2016 | December 31, 2016 | June 30, 2016 | September 30, 2016 | December 31, 2016 | ||||||||||||||||||
Gross Profit | |||||||||||||||||||||||
Services | $ | 36,490 | $ | 33,704 | $ | 30,880 | $ | 68,948 | $ | 102,652 | $ | 133,532 | |||||||||||
International | 11,867 | 13,133 | 14,699 | 20,540 | 33,673 | 48,372 | |||||||||||||||||
Products and Systems | 3,050 | 3,686 | 2,481 | 5,789 | 9,475 | 11,956 | |||||||||||||||||
Corporate and eliminations | 128 | 128 | (82 | ) | 228 | 356 | 274 | ||||||||||||||||
$ | 51,535 | $ | 50,651 | $ | 47,978 | $ | 95,505 | $ | 146,156 | $ | 194,134 | ||||||||||||
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Three months ended | Six months ended | Nine months ended | Year ended | ||||||||||||||||||||
June 30, 2016 | September 30, 2016 | December 31, 2016 | June 30, 2016 | September 30, 2016 | December 31, 2016 | ||||||||||||||||||
Operating Income (Loss) | |||||||||||||||||||||||
Services | $ | 7,372 | $ | 12,221 | $ | 6,856 | $ | 18,711 | $ | 30,932 | $ | 37,788 | |||||||||||
International | 2,454 | 5,751 | 3,983 | 3,174 | 8,925 | 12,908 | |||||||||||||||||
Products and Systems | (114 | ) | 806 | (740 | ) | (246 | ) | 560 | (180 | ) | |||||||||||||
Corporate and eliminations | (4,872 | ) | (6,662 | ) | (7,154 | ) | (11,154 | ) | (17,816 | ) | (24,970 | ) | |||||||||||
$ | 4,840 | $ | 12,116 | $ | 2,945 | $ | 10,485 | $ | 22,601 | $ | 25,546 | ||||||||||||
Three months ended | Six months ended | Nine months ended | Year ended | ||||||||||||||||||||
June 30, 2016 | September 30, 2016 | December 31, 2016 | June 30, 2016 | September 30, 2016 | December 31, 2016 | ||||||||||||||||||
Adjusted EBITDA | |||||||||||||||||||||||
Services | $ | 19,467 | $ | 18,111 | $ | 12,121 | $ | 36,240 | $ | 54,351 | $ | 66,472 | |||||||||||
International | 4,954 | 6,994 | 7,348 | 7,243 | 14,237 | 21,585 | |||||||||||||||||
Products and Systems | 492 | 1,358 | (88 | ) | 938 | 2,296 | 2,208 | ||||||||||||||||
Corporate and eliminations | (3,557 | ) | (4,665 | ) | (5,011 | ) | (8,064 | ) | (12,729 | ) | (17,740 | ) | |||||||||||
$ | 21,356 | $ | 21,798 | $ | 14,370 | $ | 36,357 | $ | 58,155 | $ | 72,525 | ||||||||||||
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