Document


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): August 10, 2016
 
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 2.02.  Results of Operations and Financial Condition
 
On August 10, 2016, Mistras Group, Inc. (the “Company,” “we” or “us”) issued a press release announcing the financial results for the fourth quarter and full fiscal year for the fiscal year ending May 31, 2016.  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 term “Adjusted EBITDA” which is not a measure of financial performance under U.S. generally accepted accounting principles (“GAAP”).  Information regarding this non-GAAP financial measure and its use by the Company is set forth in the Company’s annual report on Form 10-K filed August 12, 2015 and a reconciliation of Adjusted EBITDA to a financial measure under GAAP is included in a table attached to the press release.
 
The tables attached to the press release also include the non-GAAP financial measures "Segment and Total Company Income (Loss) before Special Items,” “Net Income Excluding Legal Settlement” and “Diluted EPS Excluding Legal Settlement,” reconciling these measures to financial measures under GAAP.  These non-GAAP measures exclude from the GAAP measures (a) transaction expenses related to acquisitions, such as professional fees and due diligence costs, (b) the net changes in the fair value of acquisition-related contingent consideration liabilities and (c) nonrecurring items.  These items have been excluded from the GAAP measures because these expenses and credits are not related to the Company’s or Segment's core business operations.  The acquisition related costs and nonrecurring items can be a net expense or credit in any given period.
 
Management believes that these measures provide investors with useful information and more meaningful period over period comparisons by identifying and excluding these acquisition-related costs and nonrecurring items so that the performance of the core business operations can be identified and compared.  Management also believes that these measures help our investors to better understand the profitability trends of our business, and facilitate easier comparisons of our profitability to prior and future periods and to our peers.
 
The term "free cash flow" is also a non-GAAP financial measure used in the press release. In the paragraph in which this term is used, the Company explains this measurement and the financial measures under GAAP that comprise free cash flow. Management believes this measure assists investors in understanding the cash generated from operations net of cash needed to be re-invested in the business for capital expenditures.

The term "net debt" is a non-GAAP measure used in the press release, which is defined as the sum of the current and long-term portions of long-term debt and capital lease obligations, less cash and cash equivalents. Management believes this measure assists investors in understanding the debt needed to support operations.

These non-GAAP measures should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measures.  These measures have limitations because there are no standards to determine which adjustments to GAAP measures should be made, and/or may not be comparable with similar measures for other companies.  In addition, acquisitions are a part of our growth strategy, and therefore acquisition-related items are a necessary cost of our business. Segment and Total Company Income (Loss) before Special Items, Net Income Excluding Legal Settlement and free cash flow are not metrics used to determine incentive compensation. Adjusted EBITDA is used to determine a portion of the incentive compensation for executive officers.
 
Item 9.01.  Financial Statement and Exhibits
 
(d)  Exhibits
 
99.1                        Press release issued by Mistras Group, Inc. dated August 10, 2016


2



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: August 10, 2016
By:
/s/ Michael C. Keefe
 
 
Name:
Michael C. Keefe
 
 
Title:
Executive Vice President, General Counsel and Secretary

Exhibit No.
 
Description
99.1

 
Press release issued by Mistras Group, Inc. dated August 10, 2016

3
Exhibit


Exhibit 99.1
 
Mistras Group Exceeds Profit and Revenue Guidance with Strong Fourth Quarter Results; Announces Fiscal Year 2017 Guidance
Q4 Earnings per Diluted Share of $0.09 including legal settlement, $0.22 (excluding legal settlement)
Annual Earnings per Diluted Share of $0.82 including legal settlement, $0.96 (ex-legal settlement)
Q4 Adjusted EBITDA $21.4 Million, 11.6% of Revenues; Annual $88.1 Million, 12.2% of Revenues
Q4 Revenue Growth of 5% over prior year Despite Difficult Market and Canadian Oil Sands Fires
Operating and Free Cash Flow each grew by over $18 million during Full Fiscal Year
MISTRAS Group, Inc. August 10, 2016 4:01 PM

PRINCETON JUNCTION, N.J., August 10, 2016 (GLOBE NEWSWIRE) - Mistras Group, Inc. (MG: NYSE), a leading "one source" global provider of technology-enabled asset protection solutions, reported financial results for the fourth quarter of its fiscal year 2016, which ended May 31, 2016.

Revenues for the fourth quarter grew by 5% year-on-year to $184.2 million, inclusive of adverse impacts from fires that interrupted work in the Canadian oil sands region and foreign exchange rates, which combined to reduce revenues by approximately 2%. Revenues for fiscal year 2016 grew by approximately 1% to $719.2 million, inclusive of a cumulative reduction of approximately $25 million, or 4%, from the impact of adverse foreign exchange rates and the absence of revenues from prior year dispositions.

As previously announced, the Company has agreed to settle a class action lawsuit that is pending in U.S. District Court for the Northern District of California, involving claims related to California and Federal wage and hour and other labor laws. The Company accrued a one-time pre-tax charge of $6.3 million, or approximately $0.13 per diluted share, (net of tax) during the fourth quarter of fiscal year 2016 for this matter.

Net income for the fourth quarter inclusive of the legal settlement was $2.8 million, or $0.09 per diluted share. Excluding the legal settlement, fourth quarter earnings per diluted share was $0.22. The Company achieved record levels of net income and earnings per diluted share in fiscal year 2016 of $24.7 million or $0.82 per diluted share inclusive of the legal settlement charge, and $28.6 million, or $0.96 per diluted share, excluding the legal settlement charge. The Company’s comparative prior fiscal year net income of $2.2 million or $0.07 per diluted share in the fourth quarter, and $16.1 million net income or $0.54 per diluted share for the full year, included after-tax structural charges of approximately $3.7 million or $0.13 per diluted share primarily related to severance and disposition of two former foreign operations.

Adjusted EBITDA was $21.4 million, or 11.6% of revenues in the fourth quarter of fiscal year 2016, a 20% improvement over the prior year’s $17.9 million, or 10.2% of revenues. Adjusted EBITDA for the full fiscal year 2016 was $88.1 million and 12.2% of revenues, 23% higher than the prior year’s $71.9 million and 10.1% of revenues. The impact of the legal settlement was excluded from Adjusted EBITDA because management believes this non-recurring charge is not indicative of the Company’s ongoing performance or underlying performance trends.

Gross profit margins improved to 28.2% in the fourth quarter of fiscal year 2016 from the prior year’s 25.7% and to 28.2% for the entire fiscal year, compared with the prior year’s 26.0%. The fourth quarter year-on-year improvement was driven by the Services segment, which improved its gross margin by 140 basis points to 26.3%, and by the International segment, which improved by over 1,000 basis points to 32.0% due in part to the absence of prior year structural charges. For the entire fiscal year, Services gross margins improved by 130 basis points to 26.3%, while International improved by 700 basis points to 30.5%. The improvements for both the fourth quarter and the entire fiscal year were driven by improved utilization of





technicians, improved contract management discipline and particularly in the International segment, by the beneficial impact of organic growth.

Operating income for the fourth quarter of fiscal year 2016 improved by $0.3 million, or 6%, compared with prior year on a GAAP basis and by $4.2 million, or 57%, excluding special items in both years. Operating income for the entire fiscal year 2016 improved by $12.8 million, or 42% on a GAAP basis and by over $18 million or 61%, calculated on the same basis as above. On the same basis of calculation, operating margin of 6.8% for the entire fiscal year 2016 improved by 250 basis points over the prior year.

Cash flow from operating activities was $68.1 million in fiscal year 2016, representing improvement of $18.3 million, or 37% over prior year. Free cash flow, defined as cash flow from operating activities less cash used to purchase property, plant and equipment and intangible assets, was $51.9 million in fiscal year 2016, representing improvement of $18.1 million, or 53% over prior year. Net debt improved to approximately 0.9x Adjusted EBITDA at May 31, 2016, from 1.7x at May 31, 2015.
Performance by segment was as follows:

Services segment revenues for the fourth quarter grew 5% year-on-year, as the favorable impact from market share gains and the timing of turnaround and project-related work more than offset the adverse impacts of a weak overall oil and gas market, the Canadian oil sands fires and adverse foreign exchange. Services revenues for fiscal year 2016 were 2% higher than prior year, driven by low single digit organic growth, plus acquisition growth that was mostly offset by adverse foreign exchange.

Services fourth quarter 2016 operating margin improved by 70 basis points to 10.3% excluding the legal charge. Services full year 2016 operating margin improved by 150 basis points to 10.6% excluding the legal charge. Services improvements were driven by improved utilization of technicians and improved contract management discipline.

International segment revenues for the fourth quarter grew 11% year-on-year, as double-digit organic growth more than offset the adverse impact of foreign exchange and prior year dispositions. International revenues for fiscal year 2016 declined by 3%, as the combined impact of foreign exchange and dispositions outweighed high single-digit organic growth.

International segment operating income was $2 million in the fourth quarter of fiscal year 2016 compared with a prior year operating loss. For the full fiscal year 2016, International operating income was $9 million compared with a prior year operating loss. The Company’s four largest country operations each experienced year-on-year operating income improvements in every quarter of fiscal year 2016, driven by the combined impact of the prior year structural initiatives, positive organic growth and an improved sales mix.

Products and Systems segment revenues for the fourth quarter declined by $1.7 million or 20% year-on-year, and by $1.0 million or 3% during fiscal year 2016. Products and Systems operating income declined by approximately $1 million in the fourth quarter of 2016, driven by the timing of sales, but improved modestly for the full fiscal year.

Sotirios Vahaviolos, Chairman and Chief Executive Officer stated, "Mistras Group continued to perform well in our Services segment and in all of our International businesses. I am particularly pleased with our revenue growth for the fourth quarter and for the entire fiscal year, in a market environment where organic revenue declines have become more typical as commodity prices caused customers to be very cautious in their spending. After the 4th quarter ended, we were awarded a multi-year contract to perform a wide range of nondestructive and destructive testing services for a major European aircraft engine manufacturer. We will be providing more information on this very important new contract shortly."

Dr. Vahaviolos added: “Despite the uncertainty and turbulence in the oil and gas market, we continue to be there for our customers, helping to maintain the integrity of their assets with our wide ranging inspection techniques, our premier safety record and a focus on helping them save money. Overall, I am extremely pleased with the improvement in our financial performance. Our improved profit margins and cash flows reflect the strength of our franchise and our ability to invest in the future of our Company. We will continue to be a trusted service provider for our clients, in good markets and in difficult ones, in every market in which we do business."
Share Repurchases
The Company has not yet repurchased shares pursuant to its existing $50 million stock repurchase authorization that was put into place in 2015. The Company plans to become more active in this regard, and the Company’s Board of Directors has approved a plan to repurchase shares owned by its largest shareholder, Chairman and Chief Executive Officer, Dr. Sotirios Vahaviolos. The Company plans to purchase up to 1 million shares owned by Dr. Vahaviolos at a rate of up to $2 million per





month. The Company expects to execute an agreement with Dr. Vahaviolos shortly, which will set the repurchase prices at a discount of 2% below the average closing price of Mistras Group common stock in the preceding calendar month, subject to agreed-upon minimum and maximum repurchase prices.
Dr. Vahaviolos stated “I have decided to sell a minority portion of my Mistras Group stock for the first time. Once we consummate this agreement, the Company will achieve the benefits of buying back its stock without reducing its float, and it will enable me to start diversifying my personal finances.”

Planning Assumptions and Guidance for Fiscal 2017
The Company is introducing its planning assumptions and guidance for fiscal year 2017 that commenced on June 1, 2016. The market price of petroleum products continues to be volatile, influenced by both economic and political factors which are difficult to predict. The Company continues to operate its business with an expectation that the “lower for longer” dynamic will be in place for the foreseeable future, and that the market for inspection services will be correspondingly flat to down.
Total revenues for fiscal year 2017 are expected to be between $720 million and $735 million, representing an increase over fiscal year 2016 of from 0% to 2%. Adjusted EBITDA for fiscal year 2017 is expected to be between $89 million to $95 million, representing an increase of from 1% to 8% over fiscal year 2016 results.
The Company expects that its operating and free cash flow will be similar to that of fiscal year 2016. The Company expects to deploy its available free cash flow for three purposes: acquisitions, debt reduction and stock buybacks, in roughly equal amounts.
The Company expects that its net income will be in a range of from $29 million to $33 million, and that its earnings per diluted share will be in a range of from $0.99 to $1.12, representing an increase of from 3% to 17% over fiscal year 2016’s benchmark of $0.96, excluding the legal settlement charge.
Regarding seasonality, the Company believes that the first fiscal quarter of its fiscal year 2016 contained an unusually high amount of customer turnaround and project work that was driven by refinery strikes that occurred earlier in calendar year 2015. Because a similar dynamic did not reoccur in calendar 2016, the Company expects that the absence of this special work in the first quarter of fiscal year 2017 will cause its revenues, Adjusted EBITDA, net income and earnings per diluted share to be lower than in the prior year’s first quarter. The Company also expects that market share gains, acquisitions and other improvements will cause these metrics to compare favorably in subsequent fiscal quarters.

Conference Call

In connection with this release, Mistras will hold a conference call on Thursday, August 11, 2016 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 1-844-832-7227 and use confirmation code 60777892 when prompted. The International dial-in number is 1-224-633-1529.

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; destructive testing 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 2015 filed with the Securities and Exchange Commission on August 12, 2015, as updated by our reports on Form 10-Q and Form 8-K, and these will be updated further upon the Company filing its annual report on Form 10-K for fiscal year 2016. 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 US 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. These adjusted financial measures are non-GAAP and should be considered in addition to, but not as a substitute for, the information prepared in accordance with US GAAP. We typically exclude certain GAAP items that management does not believe affect our basic operations and that do not meet the GAAP definition of unusual or non-recurring items. Other companies may define these measures in different ways. The term "Adjusted EBITDA" used in this release is a financial measurement not calculated in accordance with generally accepted accounting principles in the U.S. ("US GAAP"). A Reconciliation of Adjusted EBITDA to a financial measurement under US GAAP is set forth in a table attached to this press release. In addition, the Company has also included in the attached tables non-GAAP measurements “Segment and Total Company Income (Loss) Before Special Items” and “Net Income Excluding Legal Settlement and Diluted EPS Excluding Legal Settlement”, reconciling these measurements to financial measurements under US GAAP. The Company uses the term “free cash flow”, a non-GAAP measurement the Company defines as free cash flow 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 and capital lease obligations, less cash and cash equivalents. The Company believes 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 on a consistent basis and measure underlying trends and results of the Company's business.










Mistras Group, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
 
 
 
 
 
 
 
 
May 31, 2016
 
May 31, 2015
ASSETS
 
 

 
 

Current Assets
 
 

 
 

Cash and cash equivalents
 
$
21,188

 
$
10,555

Accounts receivable, net
 
137,913

 
133,228

Inventories
 
9,918

 
10,841

Deferred income taxes
 
6,216

 
5,144

Prepaid expenses and other current assets
 
12,711

 
11,698

Total current assets
 
187,946

 
171,466

Property, plant and equipment, net
 
78,676

 
79,256

Intangible assets, net
 
43,492

 
51,276

Goodwill
 
169,220

 
166,414

Deferred income taxes
 
1,000

 
1,208

Other assets
 
2,341

 
2,107

Total Assets
 
$
482,675

 
$
471,727

 
 
 
 
 
LIABILITIES AND EQUITY
 
 

 
 

Current Liabilities
 
 

 
 

Accounts payable
 
$
10,796

 
$
10,529

Accrued expenses and other current liabilities
 
62,983

 
55,914

Current portion of long-term debt
 
12,553

 
17,902

Current portion of capital lease obligations
 
7,835

 
8,646

Income taxes payable
 
2,710

 
532

Total current liabilities
 
96,877

 
93,523

Long-term debt, net of current portion
 
72,456

 
95,557

Obligations under capital leases, net of current portion
 
11,932

 
10,717

Deferred income taxes
 
18,328

 
16,984

Other long-term liabilities
 
6,794

 
9,934

Total Liabilities
 
206,387

 
226,715

 
 
 
 
 
Commitments and contingencies
 
 

 
 

 
 
 
 
 
Equity
 
 

 
 

Preferred stock, 10,000,000 shares authorized
 

 

Common stock, $0.01 par value, 200,000,000 shares authorized
 
290

 
287

Additional paid-in capital
 
213,737

 
208,064

Retained earnings
 
82,235

 
57,581

Accumulated other comprehensive loss
 
(20,099
)
 
(21,113
)
Total Mistras Group, Inc. stockholders’ equity
 
276,163

 
244,819

Noncontrolling interests
 
125

 
193

Total Equity
 
276,288

 
245,012

Total Liabilities and Equity
 
$
482,675

 
$
471,727







Mistras Group, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share data)
 
 
 
Three months ended May 31,
 
Year ended May 31,
 
 
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
Revenue
 
$
184,187

 
$
174,686

 
$
719,181

 
$
711,252

Cost of revenues
 
126,434

 
124,263

 
494,911

 
506,281

Depreciation
 
5,753

 
5,457

 
21,262

 
20,238

Gross profit
 
52,000

 
44,966

 
203,008

 
184,733

Selling, general and administrative expenses
 
37,638

 
38,820

 
141,229

 
143,978

Research and engineering
 
624

 
599

 
2,523

 
2,521

Depreciation and amortization
 
2,867

 
3,050

 
11,212

 
13,048

Acquisition-related (benefit) expense, net
 
(367
)
 
(2,130
)
 
(1,453
)
 
(5,167
)
   Legal settlement
 
6,320

 

 
6,320

 

Income from operations
 
4,918

 
4,627

 
43,177

 
30,353

Interest expense
 
382

 
1,204

 
4,762

 
4,622

Income before provision for income taxes
 
4,536

 
3,423

 
38,415

 
25,731

Provision for income taxes
 
1,764

 
1,283

 
13,765

 
9,740

Net income
 
2,772

 
2,140

 
24,650

 
15,991

Less: net income (loss) attributable to noncontrolling interests, net of taxes
 
8

 
(31
)
 
(4
)
 
(90
)
Net income attributable to Mistras Group, Inc.
 
$
2,764

 
$
2,171

 
$
24,654

 
$
16,081

 
 
 
 
 
 
 
 
 
Earnings per common share
 
 

 
 

 
 

 
 

Basic
 
$
0.10

 
$
0.08

 
$
0.85

 
$
0.56

Diluted
 
$
0.09

 
$
0.07

 
$
0.82

 
$
0.54

Weighted average common shares outstanding:
 
 

 
 
 
 
 
 
Basic
 
28,925

 
28,703

 
28,856

 
28,613

Diluted
 
30,126

 
29,594

 
29,891

 
29,590







Mistras Group, Inc. and Subsidiaries
Unaudited Operating Data by Segment
(in thousands)

 
Three months ended May 31,
 
Year ended May 31,
 
2016
 
2015
 
2016
 
2015
Revenues
 

 
 

 
 

 
 

Services
$
141,795

 
$
135,573

 
$
553,279

 
$
540,224

International
35,940

 
32,343

 
143,025

 
146,953

Products and Systems
6,950

 
8,667

 
30,293

 
31,255

Corporate and eliminations
(498
)
 
(1,897
)
 
(7,416
)
 
(7,180
)
 
$
184,187

 
$
174,686

 
$
719,181

 
$
711,252

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended May 31,
 
Year ended May 31,
 
2016
 
2015
 
2016
 
2015
Gross profit
 

 
 

 
 

 
 

Services
$
37,319

 
$
33,749

 
$
145,262

 
$
135,201

International
11,500

 
6,777

 
43,613

 
34,572

Products and Systems
3,065

 
4,111

 
14,022

 
14,314

Corporate and eliminations
116

 
329

 
111

 
646

 
$
52,000

 
$
44,966

 
$
203,008

 
$
184,733

 
 
 
 
 
 
 
 






Mistras Group, Inc. and Subsidiaries
Unaudited Reconciliation of
Segment and Total Company Income (Loss) from Operations (GAAP) to
Segment and Total Company Income (Loss) before Special Items (non-GAAP)
(in thousands)

 
Three months ended May 31,
 
Year ended May 31,
 
2016
 
2015
 
2016
 
2015
Services:
 

 
 
 
 

 
 

Income from operations (GAAP)
$
8,267

 
$
12,934

 
$
52,552

 
$
49,142

Legal settlement
6,320

 

 
6,320

 

Severance costs

 

 
188

 

Acquisition-related (benefit) expense, net
(254
)
 
(1,249
)
 
(1,061
)
 
(639
)
Income before special items (non-GAAP)
14,333

 
11,684

 
57,999

 
48,503

 
 
 
 
 
 
 
 
International:
 
 
 
 
 

 
 

Income (loss) from operations (GAAP)
$
2,368

 
$
(1,738
)
 
$
9,293

 
$
(575
)
Severance costs
646

 
681

 
885

 
1,082

Asset write-offs and lease terminations

 
872

 

 
872

Acquisition-related (benefit) expense, net
(84
)
 
(867
)
 
(520
)
 
(2,926
)
Income (loss) before special items (non-GAAP)
2,930

 
(1,052
)
 
9,658

 
(1,547
)
 
 
 
 
 
 
 
 
Products and Systems:
 
 
 
 
 
 
 

Income from operations (GAAP)
$
11

 
$
1,131

 
$
2,688

 
$
2,461

Severance costs
28

 
99

 
34

 
99

Asset write-offs and lease terminations

 
157

 

 
157

Acquisition-related (benefit) expense, net

 

 

 

Income before special items (non-GAAP)
39

 
1,387

 
2,722

 
2,717

 
 
 
 
 
 
 
 
Corporate and Eliminations:
 
 
 
 
 

 
 

Loss from operations (GAAP)
$
(5,728
)
 
$
(7,700
)
 
$
(21,356
)
 
$
(20,675
)
Severance costs

 
542

 

 
542

Charges related to sale of foreign operations

 
2,516

 

 
2,516

Acquisition-related (benefit) expense, net
(29
)
 
(14
)
 
128

 
(1,602
)
Loss before special items (non-GAAP)
(5,757
)
 
(4,656
)
 
(21,228
)
 
(19,219
)
 
 
 
 
 
 
 
 
Total Company
 
 
 
 
 
 
 
Income from operations (GAAP)
$
4,918

 
$
4,627

 
$
43,177

 
$
30,353

Special items
$
6,627

 
$
2,736

 
$
5,974

 
$
101

Income before special items (non-GAAP)
$
11,545

 
$
7,363

 
$
49,151

 
$
30,454


























Mistras Group, Inc. and Subsidiaries
Unaudited Summary Cash Flow Information
(in thousands)

 
Year ended May 31,
 
2016
 
2015
 
 
Net cash provided by (used in):
 

 
 

Operating Activities
$
68,124

 
49,840

Investing Activities
(16,752
)
 
(49,651
)
Financing Activities
(40,378
)
 
2,066

Effect of exchange rate changes on cash
(361
)
 
(1,720
)
Net change in cash and cash equivalents
$
10,633

 
$
535

 
 
 
 







Mistras Group, Inc. and Subsidiaries
Unaudited Reconciliation of
Net Income to Adjusted EBITDA
(in thousands)



 
Three months ended May 31,
 
Year ended May 31,
 
2016
 
2015
 
2016
 
2015
 
 
 
 
Net Income
$
2,772

 
$
2,140

 
$
24,650

 
$
15,991

Less: net income (loss) attributable to noncontrolling interests, net of taxes
8

 
(31
)
 
(4
)
 
(90
)
Net income attributable to Mistras Group, Inc.
$
2,764

 
$
2,171

 
$
24,654

 
$
16,081

Interest expense
382

 
1,204

 
4,762

 
4,622

Provision for income taxes
1,764

 
1,283

 
13,765

 
9,740

Depreciation and amortization
8,620

 
8,507

 
32,474

 
33,286

Share-based compensation expense
1,517

 
1,723

 
6,514

 
6,579

Acquisition-related (benefit) expense, net
(367
)
 
(2,130
)
 
(1,453
)
 
(5,167
)
Charges related to sale of foreign operations

 
2,516

 

 
2,516

Severance costs
814

 
1,322

 
1,107

 
1,723

Foreign exchange (gains) losses
(416
)
 
260

 
(59
)
 
1,474

Lease termination and other charges

 
1,029

 

 
1,029

Legal settlement
6,320

 

 
6,320

 

Adjusted EBITDA
$
21,398

 
$
17,885

 
$
88,084

 
$
71,883

 
 
 
 
 
 
 
 









Mistras Group, Inc. and Subsidiaries
Unaudited Reconciliation of
Net Income (GAAP) and Diluted Earnings Per Share (GAAP) to
Net Income Excluding Legal Settlement (non-GAAP)
and Diluted EPS Excluding Legal Settlement (non-GAAP)
(in thousands)

 
Three months ended May 31,
 
Year ended May 31,
 
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
Net income (GAAP)
$
2,772

 
$
2,140

 
$
24,650

 
$
15,991

Legal settlement, net of tax benefit at 37.7% tax rate
3,937

 

 
3,937

 

Net Income Excluding Legal Settlement (non-GAAP)
$
6,709

 
$
2,140

 
$
28,587

 
$
15,991

 
 
 
 
 
 
 
 
Diluted earnings per common share (GAAP)
$
0.09

 
$
0.07

 
$
0.82

 
$
0.54

Legal settlement
0.13

 

 
0.13

 

Diluted EPS Excluding Legal Settlement (non-GAAP)
$
0.22

 
$
0.07

 
$
0.96

 
$
0.54

 
 
 
 
 
 
 
 







Mistras Group, Inc. and Subsidiaries
Unaudited Reconciliation of
Estimated Adjusted EBITDA and Estimated Net Income for FY 2017
(in millions)

 
For the Fiscal Year Ended May 31, 2017
 
Low
 
High
Estimated Net Income
$
29.0

 
$
33.0

     Interest expense
4.0

 
4.0

     Provision for income taxes
17.5

 
19.5

     Depreciation and amortization
32.0

 
32.0

     Share-based compensation expense
6.5

 
6.5

Estimated Adjusted EBITDA
$
89.0

 
$
95.0