Strong revenue growth in key markets - Commercial Aerospace and Data Solutions including OnStream Pipeline
Selling, General and Administrative expenses reduced by $1.3 million or 3.1% on a quarterly sequential basis
Significant Operating Cashflow increase of 134.6% for the first half of 2023 to $18.3 million

PRINCETON JUNCTION, N.J., Aug. 02, 2023 (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 second quarter and six months ended June 30, 2023.

Highlights of the Second Quarter 2023*

  • Revenue of $176.0 million, down 1.7%
  • Gross profit of $49.7 million, with gross profit margin of 28.2%
  • GAAP Net income of $0.3 million, with Adjusted EBITDA of $15.3 million
  • Operating Cash Flow of $13.9 million, and Free Cash Flow of $8.0 million

Highlights of the First Half 2023*

  • Revenue of $344.0 million, up 1.0%, a 1.9% increase excluding FX exchange impact**
  • Gross profit of $95.8 million, up 2.5%, with gross profit margin of 27.8%, up 40 bps
  • GAAP Net loss of $4.6 million, with Adjusted EBITDA up 7.9% to $25.7 million
  • Operating Cash Flow of $18.3 million, and Free Cash Flow of $7.7 million

*    All comparisons are consolidated and versus the equivalent prior year period, unless otherwise noted.
** Foreign currency (“FX”) exchange impact is calculated by converting current period financial results in local currency, using the prior period exchange rates, and comparing this amount to the current period financial results in local currency using the current period exchange rate.

For the second quarter of 2023, consolidated revenue was $176.0 million, a 1.7% decrease, including the unfavorable impact of $0.7 million of FX exchange. The second quarter revenue decline was primarily attributable to a decrease in workload associated with a delayed Defense contract and decreases in the Power Generation industry related to project timing, which more than offset strong growth in the Commercial Aerospace industry, OnStream Pipeline InLine Inspection (“ILI”) business, and Data Solutions offerings. Second quarter 2023 gross profit decreased 7.2% with gross profit margin declining 170 basis points, as compared to the year ago period. The gross margin decrease was primarily due to increased European energy costs and deleveraging of fixed costs due to revenue levels, partially offset by improved sales mix in the current quarter.

Selling, general and administrative expenses (“SG&A”) in the second quarter of 2023 were $41.5 million, up from $40.9 million in the second quarter of 2022, in part due to aforementioned unfavorable FX exchange. Second quarter SG&A was down sequentially from the first quarter of 2023, as a result of on-going budgeted cost controls.

The Company generated net income of $0.3 million in the second quarter of 2023, as compared to net income of $4.6 million in the prior year period. Adjusted EBITDA was $15.3 million in the second quarter of 2023 compared to $18.3 million in the prior year, a decrease of 16.4%, primarily attributable to the decrease in revenue and gross profit. The year-to-date 2023 net loss was $4.6 million, resulting in Adjusted EBITDA of $25.7 million which was an increase of 7.9% over the prior year period, primarily attributable to a favorable change in sales mix.

Cost Savings Implementation

As announced in February 2023, the Company has been exploring ways to improve profitability and Adjusted EBITDA, through meaningful margin improvement and steps to achieve sustained cost savings.   The Company has completed the initial phase of this project, which it refers to as Project Phoenix, wherein efficiency and profitability opportunities were identified.   The Company is now undertaking the next phase of validating actionable initiatives, which can then be implemented prospectively.   The Company will provide an update at the end of the third quarter of 2023, after further progress is made towards achievement of such opportunities.  

The Company has already taken certain actions in 2023 which are expected to yield annualized cost savings of approximately $6.2 million, of which approximately $5.1 million are expected to be realized in 2023. Most of these cost savings are related to the Company’s North America operations and are related to a reduction in overhead functions classified within the SG&A line. Approximately $4.5 million of the $5.1 million savings anticipated to be achieved in 2023 were budgeted for, and hence were included in the Company’s original Adjusted EBITDA guidance for 2023.

Chief Executive Officer Dennis Bertolotti commented, “Although we continue to generate revenue growth in many of our key markets, the impact of decreased activity under one of our Defense contracts offset these gains at a consolidated level. Hence, total revenue was down marginally, adjusted for the effect of FX exchange. However, heading into the second half of 2023, we expect Adjusted EBITDA will improve year over year despite revenue being lower than initially anticipated. We have implemented cost-saving initiatives via specific actions, many of which are expected to improve performance in our legacy Oil and Gas business.

There were also several bright spots related to revenue growth drivers in the second quarter of 2023. In particular, West Penn, a key shop laboratory business which specializes in Aerospace, reported an all-time record revenue quarter. Additionally, OnStream, our ILI pipeline testing business, achieved its best second quarter revenue in its history. The OnStream growth was driven by a record quarter for its US business, which increased revenue by over 75% for the first half of 2023, compared to the prior year period. Within Data Solutions, our PCMS/New Century business also experienced growth in the quarter, driven by continued customer adoption of its predictive analytics via OneSuite. There was also progress achieved in strengthening our financial position, with strong cash flow, and a significant reduction in days sales outstanding, which contributed to a further reduction in our outstanding debt.”

Mr. Bertolotti continued, “In the second half of the year, we will continue to seek additional, incremental benefits from Project Phoenix, expanding upon what we have already implemented in cost reduction efforts during the first half of 2023. We will continue to improve operating efficiency, which will contribute to an improved bottom line result. We also anticipate that second half revenue will be stable, with modest growth over the comparable prior year period, but with an expanded improvement in Adjusted EBITDA due to a favorable sales mix shift and on-going cost controls.”

Mr. Bertolotti concluded, “Our cash flow remains strong, and I am pleased with the investments that we have made in 2023 related to our higher growth businesses via increased capital expenditures, which will further our expansion in key growth markets. As a result of our cost savings initiatives and the growth in our high margin businesses, I am optimistic that Mistras is positioned to capitalize on the growing demand for our offerings, accelerating our transition to profitable growth.”

Performance by certain segments during the second quarter was as follows:

North America segment (Referred to as “Services” in prior filings) second quarter revenue was $145.6 million, down 2.7% from $149.5 million in the prior year quarter but down 1.9% when adjusting for unfavorable foreign currency exchange. The revenue decline was primarily due to a decrease in workload under a Defense contract and decreases in Power Generation project timing, which offset the strong growth achieved in our West Penn, OnStream and other Data Solutions related businesses. For the second quarter, gross profit was $39.7 million, compared to $43.0 million in the prior year. Gross profit margin was 27.3% for the second quarter of 2023, a 140 basis point decline from 28.7% in the second quarter of the prior year. This decrease was primarily due to unabsorbed overhead costs associated with lower revenue levels, partially offset by improved sales mix in the current year period.  

International segment second quarter revenue was $30.3 million, up 2.3% from $29.6 million in the prior year quarter and up 0.7% excluding the impact of favorable FX exchange. This revenue growth was primarily due to increased turnaround projects than in the prior year comparable quarter. International segment second quarter gross profit margin was 27.7%, compared to 31.9% in the prior year, a 420-basis point decrease, primarily attributable to inflationary pressures including rising energy and incremental subcontractor costs.

Cash Flow and Balance Sheet
The Company’s net cash provided by operating activities was $18.3 million for the first six months of 2023, compared to $7.8 million in the prior year. Free cash flow was $7.7 million for the first six months of 2023, compared to $0.7 million in the prior year. The Company’s improved cash flow performance was primarily attributable to an improvement in days sales outstanding during the current year. Capital expenditures increased by $3.5 million versus the first six months of 2022, as the Company is increasing investments to foster revenue growth.

The Company’s gross debt was $183.7 million as of June 30, 2023, compared to $191.3 million as of December 31, 2022. Gross debt decreased by $5.6 million during the quarter ended June 30, 2023, from $189.3 million as of March 31, 2023, to $183.7 million as of June 30, 2023. The Company’s net debt was $165.7 million as of June 30, 2023.

Reorganization and Other
For the second quarter of 2023, the Company recorded $1.2 million of reorganization costs related to on-going efficiency and productivity initiatives, primarily related to overhead cost savings. For the quarter, these charges included professional fees and certain restructuring charges associated with changes made in the Company’s organizational structure. For the six months ended June 30, 2023, the Company recorded $3.3 million of total reorganization costs. The actions taken in the first half of this year are expected to contribute $5.1 million to Adjusted EBITDA in the current year, of which $4.5 million was expected and budgeted for in the Company’s original outlook for 2023.

Outlook
The Company is updating its guidance ranges, to reflect current market conditions and the Company’s focus on profitable growth and cost savings. Revenue for the full year 2023 is now expected to be between $700 and $720 million, due primarily to reductions in legacy Oil and Gas revenue particularly the Downstream sub-category. Adjusted EBITDA is now expected to be between $68 and $71 million. The Company has already taken certain actions in 2023 which are expected to yield annualized cost savings of approximately $6.2 million, of which approximately $5.1 million is expected to be realized in 2023 and had been budgeted for, and hence was included in the Company’s original guidance for 2023. Operating cash flow will be adversely impacted by certain cash expenses to achieve cost savings. The Company’s Free Cash Flow guidance is being adjusted to between $23 and $25 million due to the reduction in the Company’s Adjusted EBITDA guidance and higher than anticipated Capital Expenditures of over $20 million. The Free Cash Flow guidance excludes the aforementioned impact of certain cash expenses to achieve cost savings.

Conference Call
In connection with this release, MISTRAS will hold a conference call on August 3, 2023, at 9:00 a.m. (Eastern).
To listen to the live webcast of the conference call, visit the Investor Relations section of MISTRAS Group’s website at www.mistrasgroup.com

Note there is a new process to participate in the live question and answer session. Individuals wishing to participate may preregister at: https://register.vevent.com/register/BI7c5435a7a0a842eaa827bbb551ae1307.

Upon registering, a dial-in number and unique PIN will be provided to join the conference call. Following the conference call, an archived webcast of the event will be available for one year by visiting the Investor Relations section of MISTRAS Group’s 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, strong commitment to Environmental, Social, and Governance (ESG) initiatives, and a decades-long legacy of industry leadership, MISTRAS leads clients in the oil and gas, aerospace and defense, renewable and nonrenewable power, civil infrastructure, and manufacturing industries towards achieving operational and environmental 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; building real-time monitoring equipment to enable safe travel across bridges; and helping to propel sustainability, 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 field and in-line 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 and the environment, 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 2022 Annual Report on Form 10-K dated March 15, 2023, 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 income taxes, depreciation and amortization, share-based compensation expense, 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, reorganization and related 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 “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 and 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). A reconciliation of these non-GAAP financial measurements to GAAP are also set forth in tables attached to this press release. In the tables attached is also a table reconciling “Segment and Total Company Income (Loss) from Operations (GAAP) to Income (Loss) from Operations before Special Items (non-GAAP)", “Net Loss (GAAP) and Diluted EPS (GAAP) to Net Loss Excluding Special Items (non-GAAP) and Diluted EPS Excluding Special Items (non-GAAP)” which reconciles the non-GAAP amounts to GAAP measurements.


Mistras Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)

  June 30, 2023 December 31, 2022
ASSETS (unaudited)  
Current Assets    
Cash and cash equivalents $17,999  $20,488 
Accounts receivable, net  118,773   123,657 
Inventories  16,067   13,556 
Prepaid expenses and other current assets  17,991   10,181 
Total current assets  170,830   167,882 
Property, plant and equipment, net  81,297   77,561 
Intangible assets, net  46,145   49,015 
Goodwill  201,586   199,635 
Deferred income taxes  915   779 
Other assets  40,173   40,032 
Total assets $540,946  $534,904 
LIABILITIES AND EQUITY    
Current Liabilities    
Accounts payable $17,014  $12,532 
Accrued expenses and other current liabilities  78,972   77,844 
Current portion of long-term debt  7,550   7,425 
Current portion of finance lease obligations  5,188   4,201 
Income taxes payable  980   1,726 
Total current liabilities  109,704   103,728 
Long-term debt, net of current portion  176,121   183,826 
Obligations under finance leases, net of current portion  12,441   10,045 
Deferred income taxes  10,103   6,283 
Other long-term liabilities  32,044   32,273 
Total liabilities  340,413   336,155 
Equity    
Preferred stock, 10,000,000 shares authorized  —   — 
Common stock, $0.01 par value, 200,000,000 shares authorized, 30,301,985 and 29,895,487 shares issued and outstanding  302   298 
Additional paid-in capital  245,058   243,031 
Accumulated deficit  (16,138)  (11,489)
Accumulated other comprehensive loss  (29,035)  (33,390)
Total Mistras Group, Inc. stockholders’ equity  200,187   198,450 
Non-controlling interests  346   299 
Total equity  200,533   198,749 
Total liabilities and equity $540,946  $534,904 


Mistras Group, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Income (Loss)
(in thousands, except per share data)

 Three Months Ended June 30, Six Months Ended June 30,
  2023   2022   2023   2022 
        
Revenue$176,030  $179,031  $344,046  $340,693 
Cost of revenue 120,442   119,980   236,493   235,738 
Depreciation 5,866   5,493   11,754   11,505 
Gross profit 49,722   53,558   95,799   93,450 
Selling, general and administrative expenses 41,484   40,856   84,305   82,777 
Bad debt provision for troubled customers, net of recoveries —   289   —   289 
Reorganization and other costs 1,240   (180)  3,316   (65)
Legal settlement and insurance recoveries, net 150   (153)  150   (994)
Research and engineering 511   522   991   1,073 
Depreciation and amortization 2,443   2,635   4,969   5,430 
Acquisition-related expense, net 1   13   3   63 
Income from operations 3,893   9,576   2,065   4,877 
Interest expense 3,858   2,117   7,927   4,055 
Income before provision (benefit) for income taxes 35   7,459   (5,862)  822 
Provision (benefit) for income taxes (341)  2,793   (1,260)  1,509 
Net Income (Loss) 376   4,666   (4,602)  (687)
Less: net income attributable to noncontrolling interests, net of taxes 39   23   47   33 
Net Income (Loss) attributable to Mistras Group, Inc.$337  $4,643  $(4,649) $(720)
        
Earnings (loss) per common share:       
Basic$0.01  $0.15  $(0.15) $(0.02)
Diluted$0.01  $0.15  $(0.15) $(0.02)
Weighted-average common shares outstanding:       
Basic 30,368   29,957   30,214   29,840 
Diluted 30,660   30,233   30,214   29,840 


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

 Three Months Ended June 30, Six Months Ended June 30,
  2023   2022   2023   2022 
Revenues       
North America$145,550  $149,528  $282,482  $282,474 
International 30,277   29,610   59,684   57,748 
Products and Systems 3,329   2,652   7,068   5,588 
Corporate and eliminations (3,126)  (2,759)  (5,188)  (5,117)
 $176,030  $179,031  $344,046  $340,693 
        
        
 Three Months Ended June 30, Six Months Ended June 30,
  2023   2022   2023   2022 
Gross profit       
North America$39,679  $42,954  $76,316  $73,479 
International 8,398   9,440   15,766   17,630 
Products and Systems 1,614   1,157   3,676   2,325 
Corporate and eliminations 31   7   41   16 
 $49,722  $53,558  $95,799  $93,450 


Mistras Group, Inc. and Subsidiaries
Unaudited Revenues by Category
(in thousands)

Revenue by industry was as follows:

Three Months Ended June 30, 2023North America International Products Corp/Elim Total
Oil & Gas$97,500 $8,609 $15 $—  $106,124
Aerospace & Defense 13,665  5,136  217  —   19,018
Industrials 11,066  6,203  468  —   17,737
Power generation & Transmission 5,459  1,530  1,167  —   8,156
Other Process Industries 8,864  4,466  51  —   13,381
Infrastructure, Research & Engineering 4,171  2,028  547  —   6,746
Petrochemical 1,577  156  —  —   1,733
Other 3,248  2,149  864  (3,126)  3,135
Total$145,550 $30,277 $3,329 $(3,126) $176,030


Three Months Ended June 30, 2022North America International Products Corp/Elim Total
Oil & Gas$93,098 $8,028 $139 $—  $101,265
Aerospace & Defense 17,300  5,118  26  —   22,444
Industrials 9,794  6,506  333  —   16,633
Power generation & Transmission 8,378  1,997  678  —   11,053
Other Process Industries 11,641  3,754  14  —   15,409
Infrastructure, Research & Engineering 3,183  2,193  442  —   5,818
Petrochemical 3,584  55  —  —   3,639
Other 2,550  1,959  1,020  (2,759)  2,770
Total$149,528 $29,610 $2,652 $(2,759) $179,031


Six Months Ended June 30, 2023North America International Products Corp/Elim Total
Oil & Gas$187,273 $17,464 $52 $—  $204,789
Aerospace & Defense 27,276  10,116  228  —   37,620
Industrials 20,368  12,256  1,026  —   33,650
Power generation & Transmission 10,446  3,187  2,493  —   16,126
Other Process Industries 17,973  7,703  78  —   25,754
Infrastructure, Research & Engineering 6,654  4,164  1,689  —   12,507
Petrochemical 6,714  301  —  —   7,015
Other 5,778  4,493  1,502  (5,188)  6,585
Total$282,482 $59,684 $7,068 $(5,188) $344,046


          
Six Months Ended June 30, 2022North America International Products Corp/Elim Total
Oil & Gas$179,711 $15,600 $177 $—  $195,488
Aerospace & Defense 32,322  10,058  134  —   42,514
Industrials 18,801  12,034  835  —   31,670
Power generation & Transmission 12,200  4,559  1,523  —   18,282
Other Process Industries 21,934  7,272  15  —   29,221
Infrastructure, Research & Engineering 5,689  4,232  1,339  —   11,260
Petrochemical 6,629  133  —  —   6,762
Other 5,188  3,860  1,565  (5,117)  5,496
Total$282,474 $57,748 $5,588 $(5,117) $340,693


Mistras Group, Inc. and Subsidiaries
Unaudited Revenues by Category (continued)
(in thousands)

The Company has retrospectively reclassified certain Oil and Gas sub-category revenues for each quarterly period in 2022 in order to conform the classification with the current year presentation. Total Oil and Gas sub-category revenues were unchanged in total in each quarterly period and for the full year ended December 31, 2022. The table below presents the reclassified balances for each quarterly period in the prior year.

 2022 Quarterly Revenues
 Three months ended
March 31,		 Three months ended
June 30,		 Three months ended
September 30,		 Three months ended
December 31,
Oil and Gas Revenue by sub-category       
Upstream$36,397 $38,051 $35,173 $36,435
Midstream 20,427  27,153  25,885  23,540
Downstream 37,399  36,061  35,973  35,258
Total$94,223 $101,265 $97,031 $95,233


 Three months ended June 30, Six months ended June 30,
  2023  2022  2023  2022
Oil and Gas Revenue by sub-category       
Upstream$41,961 $38,051 $78,900 $74,448
Midstream 27,293  27,153  48,524  47,580
Downstream 36,870  36,061  77,365  73,460
Total$106,124 $101,265 $204,789 $195,488


Consolidated Revenue by type was as follows:

 Three months ended June 30, Six months ended June 30,
  2023  2022  2023  2022
        
Field Services$116,104 $121,364 $225,784 $226,859
Shop Laboratories 14,244  9,916  27,376  23,005
Data Solutions 18,107  16,236  34,919  28,635
Other 27,575  31,515  55,967  62,194
Total$176,030 $179,031 $344,046 $340,693


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 June 30, Six Months Ended June 30,
  2023   2022   2023   2022 
North America:       
Income from operations (GAAP)$12,338  $14,855  $21,715  $18,615 
Bad debt provision for troubled customers, net of recoveries —   289   —   289 
Reorganization and other costs 478   1   539   28 
Legal settlement and insurance recoveries, net 150   —   150   (841)
Acquisition-related expense, net —   —   —   45 
Income from operations before special items (non-GAAP)$12,966  $15,145  $22,404  $18,136 
International:       
Income (loss) from operations (GAAP)$507  $1,580  $(61) $1,864 
Reorganization and other costs 88   (187)  195   (99)
Income from operations before special items (non-GAAP)$595  $1,393  $134  $1,765 
Products and Systems:       
Income (loss) from operations (GAAP)$94  $(420) $478  $(1,002)
Income (loss) from operations (GAAP)$94  $(420) $478  $(1,002)
Corporate and Eliminations:       
Loss from operations (GAAP)$(9,046) $(6,439) $(20,067) $(14,600)
Legal settlement and insurance recoveries, net —   (153)  —   (153)
Reorganization and other costs 674   6   2,582   6 
Acquisition-related expense, net 1   13   3   18 
Loss from operations before special items (non-GAAP)$(8,371) $(6,573) $(17,482) $(14,729)
Total Company:       
Income from operations (GAAP)$3,893  $9,576  $2,065  $4,877 
Bad debt provision for troubled customers, net of recoveries —   289   —   289 
Reorganization and other costs 1,240   (180)  3,316   (65)
Legal settlement and insurance recoveries, net 150   (153)  150   (994)
Acquisition-related expense, net 1   13   3   63 
Income from operations before special items (non-GAAP)$5,284  $9,545  $5,534  $4,170 


Mistras Group, Inc. and Subsidiaries
Unaudited Reconciliation of
Gross Debt (GAAP) to Net Debt (non-GAAP)
(in thousands)

  June 30, 2023 December 31, 2022
     
Current portion of long-term debt $7,550  $7,425 
Long-term debt, net of current portion  176,121   183,826 
Total Gross Debt (GAAP)  183,671   191,251 
Less: Cash and cash equivalents  (17,999)  (20,488)
Total Net Debt (non-GAAP) $165,672  $170,763 


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

 Three Months Ended June 30, Six Months Ended June 30,
  2023   2022   2023   2022 
Net cash provided by (used in):       
Operating activities$13,888  $13,208  $18,321  $7,809 
Investing activities (5,351)  (3,762)  (9,811)  (6,499)
Financing activities (7,236)  (9,379)  (11,187)  (5,056)
Effect of exchange rate changes on cash (19)  (1,379)  188   (1,755)
Net change in cash and cash equivalents$1,282  $(1,312) $(2,489) $(5,501)
        


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 June 30, Six Months Ended June 30,
  2023   2022   2023   2022 
        
Net cash provided by operating activities (GAAP)$13,888  $13,208  $18,321  $7,809 
Less:       
Purchases of property, plant and equipment (5,469)  (3,631)  (9,801)  (6,692)
Purchases of intangible assets (461)  (248)  (822)  (399)
Free cash flow (non-GAAP)$7,958  $9,329  $7,698  $718 


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

 Three Months Ended June 30, Six Months Ended June 30,
  2023   2022   2023   2022 
    
Net Income (loss) (GAAP)$376  $4,666  $(4,602) $(687)
Less: Net income attributable to non-controlling interests, net of taxes 39   23   47   33 
Net Income (loss) attributable to Mistras Group, Inc.$337  $4,643  $(4,649) $(720)
Interest expense 3,858   2,117   7,927   4,055 
Provision (benefit) for income taxes (341)  2,793   (1,260)  1,509 
Depreciation and amortization 8,309   8,128   16,723   16,935 
Share-based compensation expense 1,091   1,255   2,633   2,770 
Acquisition-related expense 1   13   3   63 
Reorganization and other related costs (benefit), net 1,240   (180)  3,316   (65)
Legal settlement and insurance recoveries, net 150   (153)  150   (994)
Bad debt provision for troubled customers, net of recoveries —   289   —   289 
Foreign exchange (gain) loss 654   (597)  875   4 
Adjusted EBITDA (non-GAAP)$15,299  $18,308  $25,718  $23,846 


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 June 30,  Six Months Ended June 30,
  2023   2022    2023   2022 
Net income (loss) attributable to Mistras Group, Inc. (GAAP)$337  $4,643   $(4,649) $(720)
Special items 1,391   (31)   3,469   (707)
Tax impact on special items (311)  24    (815)  180 
Special items, net of tax$1,080  $(7)  $2,654  $(527)
Net income (loss) attributable to Mistras Group, Inc. Excluding Special Items (non-GAAP)$1,417  $4,636   $(1,995) $(1,247)
         
Diluted EPS (GAAP)(1)$0.01  $0.15   $(0.15) $(0.02)
Special items, net of tax 0.04   —    0.09   (0.02)
Diluted EPS Excluding Special Items (non-GAAP)$0.05  $0.15   $(0.06) $(0.04)

_______________
(1) For the six months ended June 30, 2023 and 2022, 1,106,595 shares and 1,412,073 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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Source: MISTRAS Group, Inc.

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