Outlook is for continued 20% plus profitable growth through
technology-enabled asset protection solutions PRINCETON JUNCTION,
N.J., Oct. 27 /PRNewswire-FirstCall/ -- Mistras Group, Inc.
(NYSE:MG) today reported financial results for the first quarter of
fiscal 2010, which ended August 31, 2009. Revenues were $56.1
million, a 19.3% increase compared to the first quarter of fiscal
2009. Adjusted EBITDA for the quarter was $7.0 million, which was
nearly identical to our results in the first quarter of fiscal
2009. Net income attributable to Mistras Group, Inc. was $0.8
million as compared to $1.5 million during the first quarter of
fiscal 2009. Excluding any pro forma effects of the new shares sold
in our initial public offering effective October 14, 2009, fully
diluted earnings per share was $0.04 versus $0.06 reported in the
first quarter of fiscal 2009. Key highlights for the quarter
included: -- Growth in Services segment revenues of 27.7% --
Consolidated income from operations of $2.8 million -- New
enterprise-wide PCMS(TM) software sales and several multi-year
service contracts obtained during the quarter -- Two acquisitions
completed providing additional skilled service technicians and
complementary technologies "Customer acceptance of our unique and
comprehensive asset protection solutions provided us with solid
first quarter growth. Our strong Services growth was driven by
several new multi-year contracts, continued growth in our
mechanical integrity services, and acquisitions." "This revenue
growth was offset by decreases in our Products and Systems and
International segments, which together represent approximately 20%
of our total revenues. While the economy had a greater impact in
these segments, we see considerable proposal activity and have
multiple revenue opportunities, especially given our strategy for
international expansion and additional market growth created by our
development of new technologies and customer solutions," said
Chairman and Chief Executive Officer, Dr. Sotirios J. Vahaviolos.
First Quarter Performance As reported, Mistras' revenues were $56.1
million for the first quarter of fiscal 2010, up $9.1 million, or
19.3%, compared to the first quarter of fiscal 2009. Overall
organic growth was approximately 11%, acquisitions contributed
approximately 12%, and foreign exchange impacts reduced the total
growth by approximately 4%. All of the increase was attributable to
growth in our Services segment. For the first quarter of fiscal
2010, Mistras' income from operations was $2.8 million and net
income attributable to Mistras Group, Inc. was $0.8 million. These
results include $0.5 million in non-recurring items, including a
$0.8 million write-off of the remaining accounts receivable
associated with a large customer bankruptcy, and a $0.3 million
benefit associated with a reduction in the amount we were required
to pay in final settlement of a class action law suit. Segment
results On an operating segment basis, our Services segment
increased revenues 27.7% to $45.7 million as a result of new
multi-year contracts, as well as growth from existing customers and
acquisitions. The increase was split evenly between organic and
acquisitions. Gross profit was $12.5 million, or 27.4% of revenue
compared to $10.6 million, or 29.7% of revenue in the same quarter
last fiscal year. Revenues in the Products and Systems segment were
$3.6 million compared to $4.0 million for the first quarter of
fiscal 2009. The economy and lower capital spending are the reasons
for this decline; however, proposal activity was good and we did
sell a large imaging system for use in the aerospace industry.
Gross profit was $1.7 million, or 46.6% of revenue compared to $2.0
million, or 48.6% of revenue in the same quarter last fiscal year.
On a local currency basis, our International segment generated
11.8% growth; however, adverse foreign exchange fluctuations of
$1.7 million caused a US dollar revenue decrease of $0.7 million,
or 8.0% for the first quarter of fiscal 2010 compared to the first
quarter of fiscal 2009. Gross profit was $3.0 million, or 39.3% of
revenue compared to $4.1 million, or 48.7% of revenue in the same
quarter last fiscal year. Initial Public Offering and Related
Transactions Public trading of the our common stock began on
October 8, 2009, on the New York Stock Exchange under the ticker
symbol MG. Mistras completed its initial public stock offering of
10,000,000 shares of common stock at a public offering price of
$12.50 per share. We sold 6,700,000 shares and 3,300,000 shares
were sold by certain selling stockholders including the
underwriters' over-allotment option of 1,300,000 shares. As a
result of the offering, we received net proceeds of approximately
$77.9 million, after deducting underwriting discounts and
commissions of $5.9 million. Concurrent with the closing of the
offering on October 14, 2009, we used $66.6 million of the net
proceeds to prepay in full amounts outstanding under our term loan,
revolving credit facility and accrued interest thereon, of $25.0
million, $41.5 million and $0.1 million respectively. We anticipate
using the remaining net proceeds from our IPO for additional
offering related expenses that have not yet been paid, working
capital and other general corporate purposes, which may include the
acquisition of businesses. We do not, however, have agreements or
binding commitments for any specific acquisitions at this time.
Pending such uses, the IPO net proceeds have been invested in
short-term money market funds. As of October 27, 2009, the Company
has $55.0 million available under our revolving credit facility. In
connection with the debt repayment, the Company will write off
approximately $0.2 million of deferred debt fees associated with
the prepayment of the term loan during the second quarter of fiscal
2010. Guidance The company's outlook for fiscal 2010 for revenues
is $250 million to $280 million. We estimate our adjusted EBITDA in
fiscal 2010 will range from $39 million to $45 million. "While
there is still a great deal of economic uncertainty, we are being
cautious as to our outlook, but we are seeing many opportunities
for continued profitable growth. As always, our focus is on our
revenue growth and enhanced earnings. We believe our major
customers are looking to us for the value added proposition of
increased productivity from our asset protection solutions" said
Chairman and Chief Executive Officer, Dr. Sotirios J. Vahaviolos.
Earnings Conference Call In connection with this earnings release,
Mistras will hold its quarterly conference call on Wednesday,
October 28 at 9:00 a.m. (Eastern). The call will be broadcast over
the Web and can be accessed on Mistras' Website,
http://www.mistrasgroup.com/. Individuals in the U.S. wishing to
participate in the conference call by phone may call 866-543-6408
and use confirmation code 59732933 when prompted. (The
International number is 617-213-8899.) About Mistras Group Mistras
is a leading global provider of technology-enabled asset protection
solutions used to evaluate the structural integrity of critical
energy, industrial and public infrastructure. Mistras combines
industry-leading products and technologies, expertise in mechanical
integrity (MI) and non-destructive testing (NDT) services and
proprietary data analysis software to deliver a comprehensive
portfolio of customized solutions, ranging from routine inspections
to complex, plant-wide asset integrity assessments and management.
These mission critical solutions enhance customers' ability to
extend the useful life of their assets, increase productivity,
minimize repair costs, comply with governmental safety and
environmental regulations, manage risk and avoid catastrophic
disasters. Given the role Mistras' services play in ensuring the
safe and efficient operation of infrastructure, Mistras has
historically provided a majority of its services to its customers
on a regular, recurring basis. Mistras serves a global customer
base of companies with asset-intensive infrastructure, including
companies in the oil and gas, fossil and nuclear power, public
infrastructure, chemicals, aerospace and defense, transportation,
primary metals and metalworking, pharmaceuticals and food
processing industries. For more information, please visit the
company's website at http://www.mistrasgroup.com/. Disclosure of
Non-GAAP Financial Measures Adjusted EBITDA is a performance
measure used by management that is not calculated in accordance
with U.S. generally accepted accounting principles (GAAP).
"Adjusted EBITDA" is defined as net income plus: interest expense,
provision for income taxes, depreciation and amortization,
stock-based compensation expense, the amount of a write-off for the
remaining accounts receivable we expected to collect from a
customer that recently declared bankruptcy, and loss on
extinguishment of debt, and minus the reduction in the amount we
were required to pay in final settlement of a class action law
suit. Our management uses adjusted EBITDA as a measure of operating
performance to assist in comparing performance from period to
period on a consistent basis, for planning and forecasting overall
expectations, and for evaluating actual results against such
expectations, and as a performance evaluation metric off which to
base executive and employee incentive compensation programs. We
believe investors and other external users of our financial
statements benefit from the presentation of adjusted EBITDA in
evaluating our operating performance because it provides an
additional tool to compare our operating performance on a
consistent basis by removing 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, amortization and non-cash stock
compensation, 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. Although different forms of
adjusted EBITDA are widely used by investors and securities
analysts in their evaluation of companies, you should not consider
it in isolation or as a substitute for analyzing our results as
reported under U.S. generally accepted accounting principles.
Adjusted EBITDA is generally limited as an analytical tool because
it excludes, among other things, the statement of operations impact
of depreciation and amortization, interest expense, and the
provision for income taxes, and therefore does not necessarily
represent an accurate measure of profitability, particularly in
situations where a company is highly leveraged or has a
disadvantaged tax structure. As a result, adjusted EBITDA is of
limited value in evaluating our operating performance because (i)
we use a significant amount of capital assets and depreciation and
amortization expense is a necessary element of our costs and
ability to generate revenues; (ii) we have historically had, and
may in the future again have a significant amount of debt, and
interest expense is a necessary element of our costs and ability to
generate revenues under such circumstances; and (iii) we generally
incur significant U.S. federal, state and foreign income taxes each
year and the provision for income taxes is a necessary element of
our costs. Adjusted EBITDA also does not reflect historical cash
expenditures or future requirements for capital expenditures or
contractual commitments, changes in, or cash requirements for, our
working capital needs and all non-cash income or expense items that
are reflected in our statements of cash flows. Furthermore, because
adjusted EBITDA is not defined under GAAP, our definition of
adjusted EBITDA may differ from, and therefore may not be
comparable to, similarly titled measures used by other companies,
thereby limiting its usefulness as a comparative measure. Because
of these limitations, adjusted EBITDA should not be considered as
the primary measure of our operating performance or as a measure of
discretionary cash available to us to invest in the growth of our
business. We strongly urge you to review the GAAP financial
measures included in this press release and our consolidated
financial statements, including the notes thereto, and not to rely
on any single financial measure to evaluate our business. SAFE
HARBOR Certain statements made in this press release are
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 that involve significant
risks and uncertainties about Mistras Group, Inc. ("Mistras"),
including but not limited to statements about Mistras' products and
services, business model, strategy and growth opportunities,
profitability and competitive position. Forward-looking statements
describe future expectations, plans, results or strategies and are
generally preceded by words such as "future," "planned,"
"projected," "possible," "potential," or "targeted," and
"anticipate," "believe," "estimate," "expect," "intend," "plan,"
"predict," "project," "will," "may," "should," "could," "would" and
other similar words and phrases. You are cautioned that such
statements should not be read as a guarantee of future performance
or results, and will not necessarily be accurate indications of the
times at, or by which, such performance or results will have been
achieved. Such statements are subject to risks and uncertainties
that could cause actual performance or results to differ materially
from those expressed in these statements. Important factors that
could cause such differences include, but are not limited to, those
discussed in the "Risk Factors" section of the final prospectus in
connection with Mistras' initial public offering filed with the
Securities and Exchange Commission on October 7, 2009, such as (i)
the current economic downturn; (ii) loss of or reduction in
business with a significant customer; (iii) adverse change in the
industries Mistras serves, which include oil and gas, power
transmission and generation, chemical, aerospace and
infrastructure; (iv) Mistras' ability to manage its salary and
compensation costs, particularly as to billable time; (v) Mistras'
ability to generate cash from operations, secure external funding
for its operations and manage its liquidity needs; (vi) the
financial condition of Mistras' current and potential customers;
(vii) currency exchange or interest rates changes; (viii) political
stability; (ix) market acceptance of Mistras' products and
services; (x) significant changes in the competitive environment;
(xi) epidemic diseases; (xii) catastrophic events that cause
disruptions to our business or the business of our customers;
(xiii) changes in law, regulations and tax rates. You should
consider these factors in evaluating the forward-looking statements
included in this press release and not place undue reliance on such
statements. 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. Mistras Group Inc. and Subsidiaries Consolidated
Statement of Operations (In thousands except for per share data)
Three Months Ended August 31, 2009 2008 ---- ---- Revenues $ 56,089
$ 46,997 ============ ============ Gross profit 17,150 16,612
============ ============ Income from operations 2,786 3,689
------------ ------------ Interest expense 1,064 1,011 Loss on
extinguishment of debt 169 - ------------ ------------ Income
before provision for income taxes and noncontrolling interests
1,553 2,678 Provision for income taxes 694 1,060 ------------
------------ Net income 859 1,618 Net income attributable to
noncontrolling interests (44) (101) ------------ ------------ Net
income attributable to Mistras Group, Inc. $ 815 $ 1,517
============ ============ Earnings per common share: Basic $ 0.06 $
0.08 Diluted $ 0.04 $ 0.06 Weighted average common shares
outstanding*: Basic 13,000,000 13,000,000 Diluted 20,434,760
17,294,078 * Note: The common shares outstanding reflect a
September 21, 2009 adjustment of a 13 for 1 stock split and exclude
the sale of 6,700,000 shares of our common stock in an initial
public offering effective October 8th, 2009. Mistras Group Inc. and
Subsidiaries Unaudited Operating Data by Segment (In thousands)
Three Months Ended August 31, August 31, 2009 2008 ----------
---------- Revenues by segment Services $ 45,702 $ 35,788 Products
and Systems 3,625 4,035 International 7,751 8,421 Corporate and
eliminations (989) (1,247) ---------- ---------- $ 56,089 $ 46,997
========== ========== Gross Profit Services $ 12,528 $ 10,630
Products and Systems 1,688 1,962 International 3,046 4,102
Corporate and eliminations (112) (82) ---------- ---------- $
17,150 $ 16,612 ========== ========== Income from Operations
Services $ 3,232 $ 2,822 Products and Systems (70) 324
International 1,262 1,975 Corporate and eliminations (1,638)
(1,432) ---------- ---------- $ 2,786 $ 3,689 ========== ==========
Mistras Group Inc. and Subsidiaries Consolidated Condensed Balance
Sheets (In thousands) August 31, May 31, 2009 2009 ---- ---- ASSETS
* Cash and cash equivalents $6,035 $5,668 Other current assets
58,887 58,002 Property, plant and equipment, net 37,907 33,592
Other non-current assets 68,289 54,012 -------- -------- Total
assets $171,118 $151,274 ======== ======== LIABILITIES, PREFERRED
STOCK AND (DEFICIT) EQUITY * Current portion of long-term debt and
leases $19,257 $19,371 Other current liabilities 24,428 24,737
Long-term debt and capital leases, net of current portion 79,208
61,405 Other non-current liabilities 3,059 2,445 Preferred stock
90,983 90,983 (Deficit) equity (45,817) (47,667) -------- --------
Total liabilities, preferred stock and equity $171,118 $151,274
======== ======== * Note: The above balance sheets do not reflect
the initial public offering which occurred after the date of these
balance sheets. The pro forma impacts of this transaction as of May
31, 2009 can be found on pages 35-36 of the final prospectus dated
October 7, 2009 in connection with Mistras' initial public offering
filed with the Securities and Exchange Commission. All of the
preferred shares outstanding as of August 31, 2009 balance sheet
converted to common stock and all accretion recorded through the
redemption price formula will be credited to the Company's
(deficit) equity. Mistras Group Inc. and Subsidiaries Summary of
Cash Flows (In thousands) Three months ended August 31, 2009 2008
---- ---- Cash flows from operating activities Net income
attributable to Mistras Group, Inc. $ 815 $ 1,517 Adjustments to
reconcile net income to net cash provided by operating activities
Depreciation and amortization 3,516 3,287 Other non-cash
adjustments 1,734 58 Changes in operating assets and liabilities,
net of effect of acquisitions (1,553) (2,129) --------- --------
Net cash provided by operating activities 4,512 2,733 Cash flows
used in investing activities (14,387) (6,707) Cash flows provided
by financing activities 10,401 6,326 Effect of exchange rate
changes on cash (159) (75) Net change in cash and cash equivalents
367 2,277 Cash and cash equivalents Beginning of year 5,668 3,555
--------- -------- End of year $ 6,035 $ 5,832 ========= ========
Mistras Group Inc. and Subsidiaries Reconciliation of Net Income
attributable to Mistras Group, Inc. to EBITDA and Adjusted EBITDA
(In thousands) 2009 2008 ---- ---- (In thousands, except share
data) Net income attributable to Mistras Group, Inc. $ 815 $ 1,517
Interest expense 1,064 1,011 Provision for income taxes 694 1,060
Depreciation and amortization 3,516 3,287 ----- ----- EBITDA 6,089
6,875 Legal settlement (297) 136 Large customer bankruptcy 767 -
Stock compensation expense 250 - Loss on extinguishment of debt 169
- --- - Adjusted EBITDA 6,978 7,011 ===== ===== DATASOURCE: Mistras
Group, Inc. CONTACT: Mike Kandell, Director of External Reporting
of Mistras, +1-609-716-4107 Web Site: http://www.mistrasgroup.com/
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