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): November 2, 2021
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction | (Commission | (IRS Employer | ||||||||||||
| of incorporation) | File Number) | Identification No.) | ||||||||||||
| (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):
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
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Item 2.02. Results of Operations and Financial Condition
On November 2, 2021, Mistras Group, Inc. (the “Company,” “we” or “us”) issued a press release announcing the financial results for our third quarter of 2021, which ended September 30, 2021. A copy of the press release is attached as Exhibit 99.1 to this report.
Disclosure of Non-GAAP Financial Measures
In the press release attached, the Company uses the terms “Adjusted EBITDA,” “free cash flow, and "net debt", which are not measures of financial performance under U.S. generally accepted accounting principles (“GAAP”). In the tables to the press release, these non-GAAP financial measures and the non-GAAP financial measures "Segment and Total Company Income before Special Items”, "Net Income (Loss) Excluding Special Items", and "Diluted EPS excluding Special Items", are presented and reconciled to financial measures under GAAP. Information about these non-GAAP measures are included in the press release.
Our management uses these non-GAAP measurements as a measure of operating performance and liquidity to assist in comparing performance from period to period on a consistent basis, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations. Adjusted EBITDA and free cash flow are also performance evaluation metrics used to determine incentive compensation for executive officers.
We believe that investors and other users of the financial statements benefit from the presentation of these non-GAAP measurements because they provide additional metrics to compare the Company's operating performance and liquidity on a consistent basis and measure underlying trends and results of the Company's business. Adjusted EBITDA and Segment and Total Company Income before Special Items assist in evaluating our operating performance because they remove the impact of certain items that management believes do not directly reflect our core operations. For instance, Adjusted EBITDA generally excludes interest expense, taxes and depreciation and amortization, each of which can vary substantially from company to company depending upon accounting methods and the book value and age of assets, capital structure, capital investment cycles and the method by which assets were acquired. It also eliminates stock-based compensation, which is a non-cash expense and is excluded by management when evaluating the underlying performance of our business operations.
Our management uses free cash flow when evaluating the performance of our business operations. This measurement also takes into account cash used to purchase fixed assets needed for business operations which are not expensed. We believe this measurement provides an additional tool to compare cash generated by our operations on a consistent basis and measure underlying trends and results in our business.
While Adjusted EBITDA and free cash flow are terms and financial measurements commonly used by investors and securities analysts, they have limitations. As non-GAAP measurements, Adjusted EBITDA and free cash flows have no standard meaning and, therefore, may not be comparable with similar measurements for other companies. Similarly, segment and total company income before special items and diluted EPS excluding special items has no standard meaning and may not be comparable to measurements for other companies. Adjusted EBITDA and free cash flow are generally limited as analytical tools because they exclude charges and expenses we do incur as part of our operations as well as cash uses which are included in a GAAP cash flow statement. In addition, free cash flow does not represent residual cash flow available for discretionary expenditures since items such as debt repayments are not deducted in determining such measurement.
None of these non-GAAP financial measurements should be considered in isolation or as a substitute for analyzing our results as reported under U.S. generally accepted accounting principles.
Item 9.01. Financial Statement and Exhibits
(d) Exhibits
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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: November 2, 2021 | By: | /s/ Edward J. Prajzner | |||||||||
| Name: | Edward J. Prajzner | ||||||||||
| Title: | Executive Vice President, Chief Financial Officer and Treasurer | ||||||||||
| Exhibit No. | Description | |||||||
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Exhibit 99.1
MISTRAS Announces Third Quarter 2021 Results
Continued Recovery of Top-Line Growth and Significantly Improved Bottom-Line Performance
Revenue Increase of 18%, Operating income expands by 61% and Net Income Up 122%
Proprietary Technologies OneSuite™ Gaining Traction and Launch of Sensoria™
PRINCETON JUNCTION, N.J., November 2, 2021 (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 third quarter ended September 30, 2021.
Highlights of the Third Quarter 2021*
•Revenue of $174.6 million, up 18.0%
•Gross profit of $52.2 million, up 10.2% with gross profit margin of 29.9%
•Operating income of $9.2 million, up 60.8%
•Net income of $3.4 million, or $0.11 per diluted share
•Adjusted EBITDA of $18.8 million, up 8%; Adjusted EBITDA Margin of 10.8%
Highlights of the Year-to-Date 2021*
•Revenue of $506.0 million, up 17.2%
•Gross profit of $147.6 million, up 14.2% with gross profit margin of 29.2%
•SG&A expense of $118.6 million, up 1.7%
•Net income of $4.0 million, or $0.13 per diluted share
•Adjusted EBITDA of $48.4 million, up 41%; Adjusted EBITDA Margin of 9.6%
* All comparisons are consolidated and versus the equivalent prior year period, unless otherwise noted.
Third quarter revenue growth of 18% came in at the high end of the range anticipated by the Company last quarter, in their second quarter outlook commentary. Revenue gains reflect continued recovery in the Company’s primary end markets including Energy, Aerospace and Defense, Other Process Industries and Infrastructure. The revenue increase reflects a combination of recovery from existing customers and new contract wins creating additional long-term agreements. For the third quarter of 2021, consolidated gross profit was up 10.2% whereas gross profit margin was 29.9%, down from 32.0% a year ago, primarily due to an increase in the proportion of revenues attributable to reimbursable travel costs that were not present in
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2020 due to COVID-19 concerns, and partially offset by a favorable sales mix and better utilization. Selling, general and administrative expenses in the third quarter were $39.2 million, which is down sequentially from $39.7 million in the second quarter of 2021, despite the reversal of all remaining temporary cost reductions in the third quarter of 2021, which had been initially implemented in 2020. Selling, general and administrative expenses were up less than 5%, as compared to the prior year period, on an 18% revenue increase. Net income was $3.4 million, or $0.11 per diluted share in the quarter, increases of 122% and 120% respectively, compared to net income of $1.6 million or $0.05 per diluted share for the third quarter of 2020. Adjusted EBITDA for the quarter was $18.8 million, an increase of 8% over $17.4 million for the third quarter of 2020 and in line with the Company’s Adjusted EBITDA expectations for the quarter.
Chief Executive Officer Dennis Bertolotti commented, "We met both our top and bottom-line financial expectations for the third quarter despite the impact of Hurricane Ida. We are proud to report revenue, inclusive of this adverse impact, that was already at the top end of our previously announced range for the third quarter. Some of the work lost to Ida is expected to be recovered in the fourth quarter of 2021, as energy markets remain strong. This was another quarter in which we continued to narrow the gap with pre-pandemic performance, especially in our energy markets, where strong energy prices have led to more stable demand for our services. Despite an increase in the proportion of revenue attributable to reimbursable travel costs, gross margin expanded in the third quarter by over 100 basis points over the average of the first half of this year. Together with continued strong expense controls, this focus on gross margin has improved leverage in our business, as illustrated by the 61% expansion of our operating income in the third quarter. Our core markets are recovering, and they are also changing, and MISTRAS is evolving with them. We expect to continue to outpace the growth of our markets by offering innovative technologies and solutions that meet the evolving needs of our customers and that build value for our shareholders.”
Mr. Bertolotti additionally commented on the Company’s progress with several growth initiatives, noting, “We aim to meet the growing demand for solutions and technologies that can assure the safety, reliability, and regulatory compliance of the world’s most valuable and critical assets, such as a natural gas turbine, a wind blade, a public bridge or a private space satellite. One of these exciting technologies is the new MISTRAS OneSuite™ software ecosystem, which provides our customers with MISTRAS' popular software and services brands as integrated apps in a secure cloud environment. OneSuite™ serves as a single-access customer portal for cross-functional data activities, with access to 50-plus applications, all being offered on one centralized and interconnected platform.” Mr. Bertolotti further continued, “I am also pleased to announce our Sensoria™ Wind Blade Monitor and Sensoria™ Insights Web Portal, which provide real-time detection and visualization of wind turbine blade damages, to help our customers maximize the uptime, performance, and safety of their blades at the asset, farm and fleet levels. Sensoria™ provides additional growth and expansion of our current capabilities and greatly enhances our offerings within the renewable energy industry, by serving both OEM and retrofitted wind turbines with Edge-to-Edge Intelligence. The COVID-19 pandemic has accelerated the transition to digitally connected and integrated technologies such as OneSuite™ and Sensoria™, which provide users with data-driven insights that make their operations leaner and more intelligent. This represents an evolution in asset protection, and MISTRAS is uniquely qualified to leverage our proven capabilities and expertise such as acoustic emission monitoring, while innovating to meet the needs of the changing global landscape.”
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For more information on these exciting new solutions from MISTRAS, please visit www.mistrasgroup.com/onesuite and www.sensoriawind.com.
Performance by segment during the third quarter was as follows:
Services segment third quarter revenues were $145.0 million, up 21.1% from $119.7 million a year ago. Services segment revenues continue to reflect recovery in the Energy markets, as well as in the Other Process Industries and Infrastructure industries. For the third quarter, gross profit was $41.8 million, compared to $37.6 million in the prior year. Gross profit margin was 28.8% for the third quarter of 2021, compared to 31.4% in the third quarter of the prior year. The decrease in gross profit margin was attributable to an increase in the portion of revenue attributable to reimbursable travel costs in the current year period.
International segment third quarter revenues were $29.1 million, up 9.8% from $26.5 million a year ago. Revenues increased in all end markets with the exception of Oil and Gas. International segment third quarter gross profit margin was 31.1%, up slightly from the year ago quarter.
The Company generated $22.5 million of cash flows from operations in the first nine months of 2021, compared with $41.8 million in the year ago period. Free cash flow was $6.5 million in the first nine months of 2021, compared with $30.8 million in the comparable prior year period. Cash flow from operations and free cash flow both reflect an increase in working capital requirements precipitated by the company’s rapid growth in revenue this year.
The Company’s net debt (total debt less cash and cash equivalents) was $193.3 million as of September 30, 2021, compared to $194.5 million as of December 31, 2020. Gross debt decreased by $4.3 million during the first nine months of 2021, from $220.2 million at the end of last year to $215.9 million as of September 30, 2021.
Outlook for remainder of 2021
The Company’s business has been recovering from the low level of demand experienced in the second quarter of 2020, when the effect of COVID-19 peaked. Although energy prices and demand have improved throughout 2021, the ongoing COVID-19 pandemic continues to impact the Company. This effect is most pronounced on the Company’s second largest market Aerospace and Defense, especially in the commercial sector. Accordingly, for the fourth quarter of 2021 the Company expects revenue to be flat with the prior year quarter, primarily due to the energy markets’ immediate focus on peak uptime and a lagging commercial aerospace recovery. Adjusted EBITDA is expected to contract modestly in the fourth quarter of 2021, due to substantially all of the remaining temporary cost reductions initiated in 2020 having been fully reversed during the third quarter of 2021, and a lower level of Canadian wage subsidies in 2021 versus 2020. The Company’s outlook for the remainder of 2021 is contingent on continuing macroeconomic stability, including i) continuing stabilization in crude oil markets, ii) ongoing effectiveness of COVID-19 vaccination and booster rollout, and iii) no significant global supply chain disruptions or labor shortages, which would impact the Company’s ability to work as a critical service provider.
Conference Call
In connection with this release, MISTRAS will hold a conference call on November 3, 2021, 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 dial 1-844-832-7227 and use confirmation code 7646409 when
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prompted. The International dial-in number is 1-224-633-1529. Those who wish to listen to the call later can access an archived copy of the conference call at the MISTRAS 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, and decades-long legacy of industry leadership, MISTRAS leads clients in the oil and gas, aerospace and defense, power generation, civil infrastructure, and manufacturing industries towards achieving and maintaining operational 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; and building real-time monitoring equipment to enable safe travel across bridges, 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 (“NDT”) field 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, 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 2020 Annual Report on Form 10-K dated March 16, 2021, 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
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income taxes, depreciation and amortization, share-based compensation expense and 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 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 "non-GAAP Net Income", which is GAAP net income adjusted for certain items management believes are unusual and non-recurring. In the tables attached is a table reconciling "Net Income (Loss) (GAAP)" to "Net Income (Loss) Excluding Special Items (non-GAAP)”, and “Diluted EPS (GAAP)” to “Diluted EPS Excluding Special Items (non-GAAP)” which reconciles the non-GAAP amount to a GAAP measurement. In addition, the Company has also included in the attached tables non-GAAP measurement” “Segment and Total Company Income (Loss) Before Special Items”, reconciling these measurements to financial measurements under GAAP. The Company uses 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). 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.
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Mistras Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
| September 30, 2021 | December 31, 2020 | |||||||||||||
| ASSETS | (unaudited) | |||||||||||||
| Current Assets | ||||||||||||||
| Cash and cash equivalents | $ | 22,597 | $ | 25,760 | ||||||||||
| Accounts receivable, net | 127,699 | 107,628 | ||||||||||||
| Inventories | 12,178 | 13,134 | ||||||||||||
| Prepaid expenses and other current assets | 17,505 | 16,066 | ||||||||||||
| Total current assets | 179,979 | 162,588 | ||||||||||||
| Property, plant and equipment, net | 90,366 | 92,681 | ||||||||||||
| Intangible assets, net | 61,695 | 68,642 | ||||||||||||
| Goodwill | 205,657 | 206,008 | ||||||||||||
| Deferred income taxes | 2,676 | 2,069 | ||||||||||||
| Other assets | 46,855 | 51,325 | ||||||||||||
| Total assets | $ | 587,228 | $ | 583,313 | ||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||
| Current Liabilities | ||||||||||||||
| Accounts payable | $ | 13,343 | $ | 14,240 | ||||||||||
| Accrued expenses and other current liabilities | 88,312 | 78,500 | ||||||||||||
| Current portion of long-term debt | 18,988 | 10,678 | ||||||||||||
| Current portion of finance lease obligations | 3,773 | 3,765 | ||||||||||||
| Income taxes payable | 1,676 | 2,664 | ||||||||||||
| Total current liabilities | 126,092 | 109,847 | ||||||||||||
| Long-term debt, net of current portion | 196,866 | 209,538 | ||||||||||||
| Obligations under finance leases, net of current portion | 10,338 | 11,115 | ||||||||||||
| Deferred income taxes | 9,195 | 8,236 | ||||||||||||
| Other long-term liabilities | 43,711 | 47,358 | ||||||||||||
| Total liabilities | 386,202 | 386,094 | ||||||||||||
| Commitments and contingencies | ||||||||||||||
| Equity | ||||||||||||||
| Preferred stock, 10,000,000 shares authorized | — | — | ||||||||||||
| Common stock, $0.01 par value, 200,000,000 shares authorized, 29,457,605 and 29,234,143 shares issued and outstanding | 294 | 292 | ||||||||||||
| Additional paid-in capital | 237,577 | 234,638 | ||||||||||||
| Accumulated Deficit | (17,893) | (21,848) | ||||||||||||
| Accumulated other comprehensive loss | (19,176) | (16,061) | ||||||||||||
| Total Mistras Group, Inc. stockholders’ equity | 200,802 | 197,021 | ||||||||||||
| Noncontrolling interests | 224 | 198 | ||||||||||||
| Total equity | 201,026 | 197,219 | ||||||||||||
| Total liabilities and equity | $ | 587,228 | $ | 583,313 | ||||||||||
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Mistras Group, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Income (Loss)
(in thousands, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Revenue | $ | 174,556 | $ | 147,894 | $ | 505,968 | $ | 431,794 | |||||||||||||||
| Cost of revenue | 116,750 | 94,930 | 341,780 | 286,208 | |||||||||||||||||||
| Depreciation | 5,590 | 5,580 | 16,635 | 16,400 | |||||||||||||||||||
| Gross profit | 52,216 | 47,384 | 147,553 | 129,186 | |||||||||||||||||||
| Selling, general and administrative expenses | 39,221 | 37,473 | 118,579 | 116,638 | |||||||||||||||||||
| Impairment charges | — | — | — | 106,062 | |||||||||||||||||||
| Legal settlement and litigation charges, net | — | (360) | 1,030 | (360) | |||||||||||||||||||
| Research and engineering | 595 | 638 | 1,942 | 2,170 | |||||||||||||||||||
| Depreciation and amortization | 2,918 | 3,182 | 9,070 | 10,359 | |||||||||||||||||||
| Acquisition-related expense, net | 246 | 709 | 1,068 | 186 | |||||||||||||||||||
| Income (loss) from operations | 9,236 | 5,742 | 15,864 | (105,869) | |||||||||||||||||||
| Interest expense | 2,326 | 3,645 | 8,694 | 9,410 | |||||||||||||||||||
| Income (loss) before benefit for income taxes | 6,910 | 2,097 | 7,170 | (115,279) | |||||||||||||||||||
| Provision (benefit) for income taxes | 3,513 | 544 | 3,187 | (15,645) | |||||||||||||||||||
| Net Income (loss) | 3,397 | 1,553 | 3,983 | (99,634) | |||||||||||||||||||
| Less: net income attributable to noncontrolling interests, net of taxes | 17 | 30 | 28 | 8 | |||||||||||||||||||
| Net Income (loss) attributable to Mistras Group, Inc | $ | 3,380 | $ | 1,523 | $ | 3,955 | $ | (99,642) | |||||||||||||||
| Earnings (loss) per common share: | |||||||||||||||||||||||
| Basic | $ | 0.11 | $ | 0.05 | $ | 0.13 | $ | (3.43) | |||||||||||||||
| Diluted | $ | 0.11 | $ | 0.05 | $ | 0.13 | $ | (3.43) | |||||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||||||||
| Basic | 29,619 | 29,177 | 29,550 | 29,086 | |||||||||||||||||||
| Diluted | 30,127 | 29,311 | 30,093 | 29,086 | |||||||||||||||||||
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Mistras Group, Inc. and Subsidiaries
Unaudited Operating Data by Segment
(in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Services | $ | 144,976 | $ | 119,721 | $ | 414,251 | $ | 349,271 | |||||||||||||||
| International | 29,100 | 26,477 | 88,699 | 76,887 | |||||||||||||||||||
| Products and Systems | 3,308 | 3,932 | 9,499 | 10,746 | |||||||||||||||||||
| Corporate and eliminations | (2,828) | (2,236) | (6,481) | (5,110) | |||||||||||||||||||
| $ | 174,556 | $ | 147,894 | $ | 505,968 | $ | 431,794 | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Services | $ | 41,749 | $ | 37,603 | $ | 116,587 | $ | 103,780 | |||||||||||||||
| International | 9,038 | 8,197 | 26,278 | 21,612 | |||||||||||||||||||
| Products and Systems | 1,422 | 1,628 | 4,655 | 3,834 | |||||||||||||||||||
| Corporate and eliminations | 7 | (44) | 33 | (40) | |||||||||||||||||||
| $ | 52,216 | $ | 47,384 | $ | 147,553 | $ | 129,186 | ||||||||||||||||
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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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Services: | |||||||||||||||||||||||
| Income (loss) from operations (GAAP) | $ | 16,085 | $ | 13,599 | $ | 38,991 | $ | (57,058) | |||||||||||||||
| Impairment charges | — | — | — | 86,200 | |||||||||||||||||||
| Reorganization and other costs | — | 58 | 97 | 125 | |||||||||||||||||||
| Legal settlement and litigation charges, net | — | (360) | 1,650 | (360) | |||||||||||||||||||
| Acquisition-related expense, net | 246 | 709 | 1,034 | 186 | |||||||||||||||||||
| Income before special items (non-GAAP) | $ | 16,331 | $ | 14,006 | $ | 41,772 | $ | 29,093 | |||||||||||||||
| International: | |||||||||||||||||||||||
| Income (loss) from operations (GAAP) | $ | 1,169 | $ | (66) | $ | 2,158 | $ | (22,422) | |||||||||||||||
| Impairment charges | — | — | — | 19,862 | |||||||||||||||||||
| Reorganization and other costs | (2) | 21 | 124 | 313 | |||||||||||||||||||
| Income (loss) before special items (non-GAAP) | $ | 1,167 | $ | (45) | $ | 2,282 | $ | (2,247) | |||||||||||||||
| Products and Systems: | |||||||||||||||||||||||
| Loss from operations (GAAP) | $ | (281) | $ | (160) | $ | (653) | $ | (1,936) | |||||||||||||||
| Reorganization and other costs | — | 5 | 27 | 5 | |||||||||||||||||||
| Loss before special items (non-GAAP) | $ | (281) | $ | (155) | $ | (626) | $ | (1,931) | |||||||||||||||
| Corporate and Eliminations: | |||||||||||||||||||||||
| Loss from operations (GAAP) | $ | (7,737) | $ | (7,631) | $ | (24,632) | $ | (24,453) | |||||||||||||||
| Loss on debt modification | — | 278 | 645 | ||||||||||||||||||||
| Legal settlement and litigation charges, net | — | — | (620) | — | |||||||||||||||||||
| Reorganization and other costs | — | 14 | — | 137 | |||||||||||||||||||
| Acquisition-related expense, net | — | — | 34 | — | |||||||||||||||||||
| Loss before special items (non-GAAP) | $ | (7,737) | $ | (7,617) | $ | (24,940) | $ | (23,671) | |||||||||||||||
| Total Company: | |||||||||||||||||||||||
| Income (loss) from operations (GAAP) | $ | 9,236 | $ | 5,742 | $ | 15,864 | $ | (105,869) | |||||||||||||||
| Impairment charges | — | — | — | 106,062 | |||||||||||||||||||
| Reorganization and other costs | (2) | 98 | 248 | 580 | |||||||||||||||||||
| Loss on debt modification | — | — | 278 | 645 | |||||||||||||||||||
| Legal settlement and litigation charges, net | — | (360) | 1,030 | (360) | |||||||||||||||||||
| Acquisition-related expense, net | 246 | 709 | 1,068 | 186 | |||||||||||||||||||
| Income before special items (non-GAAP) | $ | 9,480 | $ | 6,189 | $ | 18,488 | $ | 1,244 | |||||||||||||||
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Mistras Group, Inc. and Subsidiaries
Unaudited Summary Cash Flow Information
(in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net cash provided by (used in): | |||||||||||||||||||||||
| Operating activities | $ | 4,343 | $ | 6,929 | $ | 22,469 | $ | 41,791 | |||||||||||||||
| Investing activities | (5,176) | (3,310) | (15,494) | (10,558) | |||||||||||||||||||
| Financing activities | 4,104 | (4,740) | (8,866) | (25,077) | |||||||||||||||||||
| Effect of exchange rate changes on cash | (616) | 649 | (1,272) | 944 | |||||||||||||||||||
| Net change in cash and cash equivalents | $ | 2,655 | $ | (472) | $ | (3,163) | $ | 7,100 | |||||||||||||||
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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net cash provided by operating activities (GAAP) | $ | 4,343 | $ | 6,929 | $ | 22,469 | $ | 41,791 | |||||||||||||||
| Less: | |||||||||||||||||||||||
| Purchases of property, plant and equipment | (4,942) | (3,233) | (15,130) | (10,676) | |||||||||||||||||||
| Purchases of intangible assets | (269) | (116) | (887) | (311) | |||||||||||||||||||
| Free cash flow (non-GAAP) | $ | (868) | $ | 3,580 | $ | 6,452 | $ | 30,804 | |||||||||||||||
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Mistras Group, Inc. and Subsidiaries
Unaudited Reconciliation of
Gross Debt (GAAP) to Net Debt (non-GAAP)
(in thousands)
| September 30, 2021 | December 31, 2020 | |||||||||||||
| Current portion of long-term debt | $ | 18,988 | $ | 10,678 | ||||||||||
| Long-term debt, net of current portion | 196,866 | 209,538 | ||||||||||||
| Total Gross Debt (GAAP) | 215,854 | 220,216 | ||||||||||||
| Less: Cash and cash equivalents | (22,597) | (25,760) | ||||||||||||
| Total Net Debt (non-GAAP) | $ | 193,257 | $ | 194,456 | ||||||||||
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Mistras Group, Inc. and Subsidiaries
Unaudited Reconciliation of
Net Income (Loss) (GAAP) to Adjusted EBITDA (non-GAAP)
(in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net Income (loss) (GAAP) | $ | 3,397 | $ | 1,553 | $ | 3,983 | $ | (99,634) | |||||||||||||||
| Less: Net income (loss) attributable to non-controlling interests, net of taxes | 17 | 30 | 28 | 8 | |||||||||||||||||||
| Net Income (loss) attributable to Mistras Group, Inc. | $ | 3,380 | $ | 1,523 | $ | 3,955 | $ | (99,642) | |||||||||||||||
| Interest expense | 2,326 | 3,645 | 8,694 | 9,410 | |||||||||||||||||||
| Provision (benefit) for income taxes | 3,513 | 544 | 3,187 | (15,645) | |||||||||||||||||||
| Depreciation and amortization | 8,508 | 8,762 | 25,705 | 26,759 | |||||||||||||||||||
| Share-based compensation expense | 1,452 | 1,572 | $ | 3,916 | 4,312 | ||||||||||||||||||
| Impairment charges | — | — | — | 106,062 | |||||||||||||||||||
| Acquisition-related expense (benefit), net | 246 | 709 | 1,068 | 186 | |||||||||||||||||||
| Reorganization and other related costs | (2) | 98 | 248 | 580 | |||||||||||||||||||
| Legal settlement and litigation charges, net | — | (360) | 1,030 | (360) | |||||||||||||||||||
| Loss on debt modification | — | — | 278 | 645 | |||||||||||||||||||
| Foreign exchange gain (loss) | (587) | 898 | 366 | 1,965 | |||||||||||||||||||
| Adjusted EBITDA (non-GAAP) | $ | 18,836 | $ | 17,391 | $ | 48,447 | $ | 34,272 | |||||||||||||||
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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 September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Net income (loss) attributable to Mistras Group, Inc. (GAAP) | $ | 3,380 | $ | 1,523 | $ | 3,955 | $ | (99,642) | ||||||||||||||||||
| Special items | 244 | 447 | 2,624 | 107,113 | ||||||||||||||||||||||
| Tax impact on special items | (59) | (192) | (616) | (14,233) | ||||||||||||||||||||||
| Special items, net of tax | $ | 185 | $ | 255 | $ | 2,008 | $ | 92,880 | ||||||||||||||||||
| Net income (loss) attributable to Mistras Group, Inc. Excluding Special Items (non-GAAP) | $ | 3,565 | $ | 1,778 | $ | 5,963 | $ | (6,762) | ||||||||||||||||||
Diluted EPS (GAAP)(1) | $ | 0.11 | $ | 0.05 | $ | 0.13 | $ | (3.43) | ||||||||||||||||||
| Special items, net of tax | 0.01 | 0.01 | 0.07 | 3.19 | ||||||||||||||||||||||
| Diluted EPS Excluding Special Items (non-GAAP) | $ | 0.12 | $ | 0.06 | $ | 0.20 | $ | (0.24) | ||||||||||||||||||
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(1) For the nine months ended September 30, 2020, 213,000 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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