Mistras Group, Inc. (NYSE:MG), a leading global provider of
technology-enabled asset protection solutions, today reported
financial results for the fourth quarter and fiscal year ended May
31, 2010.
Fourth Quarter and Full Year Highlights
- Fourth quarter revenues were $79.8 million, a 43% increase over
the fourth quarter of fiscal 2009. Revenues for fiscal 2010 were
$272.1 million, as compared to $209.1 million in fiscal 2009, an
increase of 30%.
- Net income attributable to Mistras Group, Inc. for the fourth
quarter of fiscal 2010 was $4.9 million as compared to $1.5 million
during the fourth quarter of fiscal 2009. Net income attributable
to Mistras Group, Inc. for fiscal 2010 was $10.1 million, as
compared to $5.5 million for fiscal 2009, an increase of 84%.
- Diluted earnings per share for the quarter and fiscal year 2010
were $0.18 and $0.41, respectively, versus a loss per share of
($2.48) and ($1.67) for the comparable periods of fiscal
2009. Fiscal 2009 earnings per share calculations include the
impact of preferred stock which had a mandatory conversion feature
requiring the preferred shares to convert to common shares as part
of the Company's initial public offering in October 2009.
- Adjusted EBITDA* for the quarter was $13.2 million as compared
to $8.0 million for the fourth quarter of fiscal 2009, an increase
of 65%. For fiscal 2010, Adjusted EBITDA* was $39.0
million as compared to $31.1 million in fiscal 2009, an increase of
25%.
- During the quarter and fiscal year, the Company generated
strong cash flow and ended the year with an increased cash position
and an undrawn credit facility, both of which will support future
growth.
Chairman and Chief Executive Officer, Dr. Sotirios J. Vahaviolos
stated, "We are very pleased with our performance in fiscal
2010. We are continuing to build on our track record of strong
revenue and profit growth despite economic challenges experienced
by many of our valued customers. Although we faced increased
pricing pressure and a competitive market, we continue to work with
our customers to provide value added asset protection
solutions. During the year, we also increased revenues by
expanding our 'run and maintain' business, whereby our customers
outsource their inspection and plant maintenance needs to
Mistras. Our customers have recognized our overall 'one
source' value proposition of technology enabled services,
proprietary products and systems, and enterprise inspection
software. We believe that our customer base will be the
platform for providing additional higher-end asset protection
solutions in the future. Our proven business model of continuously
enhancing our technology based solutions and services will create
additional benefits for our customers and provide Mistras with many
opportunities for continued growth and profitability."
Fiscal Year 2010 Results
Revenue growth in fiscal 2010 was 30% generating a compounded
annual growth rate ("CAGR") of 31% over the last four
years. The 2010 revenue growth represented the eleventh
consecutive fiscal year with double digit revenue growth. The
organic revenue growth was 18% which was consistent with our
average 19% organic growth achieved over the last four fiscal years
and an improvement over the 16% organic growth in the previous
fiscal year. The Company's Services segment revenues were
$227.8 million, an increase of $60.2 million, or 36%, as compared
to fiscal 2009. This segment achieved double digit organic
growth in each quarter in 2010 as a result of several new
multi-year contracts, as well as growth from existing customers and
acquisitions. The Company's two other segments, Products and
Systems and International had revenue growth of 9% and 6%,
respectively. The combined growth of all segments led to
record revenues in the fourth quarter of fiscal 2010 of $79.8
million, 11% greater than the previous highest quarter achieved
earlier this fiscal year and 43% greater than the fourth quarter of
fiscal 2009.
Net income attributable to Mistras Group, Inc. was $10.1 million
versus $5.5 million in fiscal 2009, an 84% increase.
Diluted earnings per share for the quarter and fiscal year 2010
were $0.18 and $0.41, respectively, versus a loss per share of
($2.48) and ($1.67) for the comparable periods of fiscal
2009. Fiscal 2009 earnings per share calculations include the
impact of preferred stock which had a mandatory conversion feature
requiring the preferred shares to convert to common shares as part
of the Company's initial public offering in October 2009.
Adjusted EBITDA* increased by 25% to $39.0 million in fiscal
2010 as compared to $31.1 million for fiscal 2009, generating a
CAGR of 33% over the last four years. Gross profit for fiscal
2010 was $82.8 million, as compared to $69.3 million in the prior
year representing an increase of 20%. For fiscal 2010, income
from operations increased 37% to $20.3 million as compared to $14.8
million in the prior year. Operating income margins increased
in all segments during the fiscal fourth quarter, while
consolidated operating income margins increased in both the quarter
and fiscal year.
Business Outlook/Guidance for Fiscal Year
2011
The Company's outlook is for continued double digit growth in
revenue and Adjusted EDITDA*. The Company projects its fiscal
2011 revenues to be in the range of $300 million to $330 million
and Adjusted EBITDA* to be in the range of $44 million to $49
million. These projections anticipate continued organic growth
supplemented by acquisitions, as well as an improvement in the
Company's profitability. Mistras does not provide specific
guidance for individual quarters, but will reaffirm or update our
annual guidance at least quarterly. Dr. Vahaviolos concluded,
"Based on a proven track record of eleven years of double digit
revenue growth and more than thirty years in developing the
technology of the future, we are upbeat about fiscal 2011 and
beyond. We will continue our business model of delivering
technology-enabled solutions for the world's industrial and public
infrastructure by leveraging the talents and experience of our 30
Ph.D.'s and other scientists, engineers and skilled and certified
technicians providing our customers a single source for their asset
protection needs."
Earnings Conference Call
In connection with this earnings release, Mistras will hold its
quarterly conference call on Wednesday, August 11 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 800-901-5259 and use confirmation
code 34721602 when prompted. (The International dial-in number
is 617-786-4514.)
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; 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 or contact Frank Joyce, Chief Financial
Officer at 609-716-4103.
The MISTRAS Group, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=6966
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. 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. Important factors that could cause such
differences include, but are not limited to, current economic
conditions; loss of or reduction in business with a significant
customer; adverse change in the industries Mistras serves, which
include oil and gas, power transmission and generation, chemical,
aerospace and infrastructure; market acceptance of Mistras'
products and services; significant changes in the competitive
environment; catastrophic events that cause disruptions to the
business of Mistras or its customers; the ability to attract and
train engineers, scientists, and skilled technicians; and any
accidents or incidents involving the Company's services or asset
protection solutions. A further list, description and
discussion of these and other risks and uncertainties can be found
in the "Risk Factors" section of the prospectus dated October 7,
2009 used in connection with Mistras' initial public offering filed
with the Securities and Exchange Commission on October 9, 2009,
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.
* Use of Non-GAAP Measures
The term "Adjusted EBITDA" is a financial measurement not
calculated in accordance with U.S. generally accepted accounting
principles. The Company believes that investors and other
users of the financial statements benefit from the presentation of
Adjusted EBITDA because it provides an additional metric to compare
the Company's operating performance on a consistent basis and
measure underlying trends and results of the Company's
business. An explanation of Adjusted EBITDA and a
reconciliation of this to a financial measurement under GAAP are
set forth in a table attached to this press release.
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Mistras Group, Inc. and
Subsidiaries |
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Unaudited Consolidated
Statements of Operations |
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(In thousands except for per
share data) |
|
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|
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|
Three Months Ended May
31, |
Year Ended May
31, |
|
2010** |
2009 |
2010** |
2009 |
|
|
|
|
|
|
|
|
|
|
Revenues: |
$79,784 |
$55,860 |
$272,128 |
$209,133 |
Cost of Revenues: |
|
|
|
|
Cost of services and goods sold |
51,944 |
35,358 |
178,644 |
131,167 |
Depreciation |
2,789 |
2,490 |
10,640 |
8,700 |
Total cost of
revenues |
54,733 |
37,848 |
189,284 |
139,867 |
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|
|
|
|
Gross profit |
25,051 |
18,012 |
82,844 |
69,266 |
Selling, general and administrative
expenses |
14,481 |
12,465 |
55,410 |
46,456 |
Research and engineering |
624 |
520 |
2,142 |
1,949 |
Depreciation and amortization |
1,115 |
819 |
4,673 |
3,936 |
Acquisition related expenses |
614 |
-- |
614 |
-- |
Legal settlement |
-- |
(40) |
(297) |
2,100 |
Income from operations |
8,217 |
4,248 |
20,302 |
14,825 |
Other expenses |
|
|
|
|
Interest expense |
706 |
922 |
3,531 |
4,614 |
Loss on extinguishment of long-term
debt |
-- |
-- |
387 |
-- |
Income before provision for income taxes and
noncontrolling interest |
7,511 |
3,326 |
16,384 |
10,211 |
Provision for income taxes |
2,599 |
1,810 |
6,291 |
4,558 |
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|
Net income |
4,912 |
1,516 |
10,093 |
5,653 |
Net loss (income) attributable to
noncontrolling interests |
7 |
(14) |
(23) |
(187) |
|
|
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|
Net income attributable to Mistras Group,
Inc. |
4,919 |
1,502 |
10,070 |
5,466 |
Accretion of preferred stock |
-- |
33,793 |
(6,499) |
27,114 |
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Net income attributable to common
stockholders |
$4,919 |
$(32,291) |
$16,569 |
$(21,648) |
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Earnings (loss) per common share: |
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Basic |
$0.18 |
$(2.48) |
$0.76 |
$(1.67) |
Diluted |
$0.18 |
$(2.48) |
$0.41 |
$(1.67) |
Weighted average common shares
outstanding: |
|
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|
Basic |
26,613 |
13,000 |
21,744 |
13,000 |
Diluted |
26,795 |
13,000 |
24,430 |
13,000 |
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** In the fourth quarter of 2010,
the Company adjusted its methodology for computing its liability
for workers' compensation claims in its Services segment. The
Company recorded a favorable adjustment of $760 in the period
consisting of a $631 reduction in cost of revenues and a $129
reduction in selling, general and administration expenses. A
portion of this adjustment related to prior fiscal periods;
however, this was not material to any prior period. The after
tax impact of this adjustment was approximately 0.5% of fourth
quarter revenues. |
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Mistras Group, Inc. and
Subsidiaries |
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Unaudited Operating Data by
Segment |
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(In thousands) |
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Three Months
Ended May 31, |
Year Ended May
31, |
|
2010** |
2009 |
2010** |
2009 |
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Revenues: |
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|
Services |
$68,230 |
$47,104 |
$227,782 |
$167,543 |
Products and Systems |
5,738 |
4,255 |
18,875 |
17,310 |
International |
7,598 |
5,783 |
30,920 |
29,165 |
Corporate and eliminations |
(1,782) |
(1,282) |
(5,449) |
(4,885) |
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|
$79,784 |
$55,860 |
$272,128 |
$209,133 |
|
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Gross profit: |
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Services |
$19,722 |
$14,210 |
$61,553 |
$48,480 |
Products and Systems |
2,814 |
1,828 |
10,031 |
8,476 |
International |
2,456 |
2,112 |
11,668 |
12,602 |
Corporate and eliminations |
59 |
(138) |
(408) |
(292) |
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|
$25,051 |
$18,012 |
$82,844 |
$69,266 |
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Income from operations: |
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|
Services |
$9,000 |
$5,551 |
$22,114 |
$13,681 |
Products and Systems |
926 |
81 |
2,947 |
1,664 |
International |
411 |
(208) |
3,008 |
4,091 |
Corporate and eliminations |
(2,120) |
(1,176) |
(7,767) |
(4,611) |
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|
$8,217 |
$4,248 |
$20,302 |
$14,825 |
|
|
|
|
|
** In the fourth quarter of 2010,
the Company adjusted its methodology for computing its liability
for workers' compensation claims in its Services segment. The
Company recorded a favorable adjustment of $760 in the period
consisting of a $631 reduction in cost of revenues and a $129
reduction in selling, general and administration expenses. A
portion of this adjustment related to prior fiscal periods;
however, this was not material to any prior period. The after
tax impact of this adjustment was approximately 0.5% of fourth
quarter revenues. |
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Mistras Group, Inc. and
Subsidiaries |
|
|
Unaudited Consolidated Balance
Sheets |
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(In thousands) |
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|
May 31, |
May 31, |
|
2010 |
2009 |
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ASSETS |
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Cash and cash equivalents |
$16,037 |
$5,668 |
Other current assets |
68,343 |
55,047 |
Property, plant and equipment, net |
39,981 |
36,547 |
Other non-current assets |
61,806 |
54,012 |
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Total assets |
$186,167 |
$151,274 |
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LIABILITIES, PREFERRED
STOCK AND EQUITY (DEFICIT) |
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Current portion of long-term debt and capital
leases |
$11,464 |
$19,371 |
Other current liabilities |
25,486 |
24,737 |
Long-term debt and capital leases, net of
current portion |
15,099 |
61,405 |
Other non-current liabilities |
3,452 |
2,445 |
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Preferred stock |
-- |
90,983 |
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|
Equity (deficit) |
130,666 |
(47,667) |
Total liabilities, preferred stock and
equity |
$186,167 |
$151,274 |
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Mistras Group, Inc. and
Subsidiaries |
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Unaudited Reconciliation of Net
Income |
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|
|
attributable to Mistras Group,
Inc. to |
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EBITDA and Adjusted
EBITDA¹ |
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(In thousands) |
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Three Months Ended May
31, |
Year Ended May
31, |
|
2010** |
2009 |
2010** |
2009 |
|
|
|
|
|
Net income attributable to Mistras
Group, Inc. |
$4,919 |
$1,502 |
$10,070 |
$5,466 |
Interest expense |
706 |
922 |
3,531 |
4,614 |
Provision for income taxes |
2,599 |
1,810 |
6,291 |
4,558 |
Depreciation and amortization |
3,904 |
3,309 |
15,313 |
12,636 |
EBITDA |
12,128 |
7,543 |
35,205 |
27,274 |
Stock compensation expense |
835 |
96 |
2,695 |
192 |
Acquisition related expenses |
614 |
-- |
614 |
-- |
Legal settlement |
-- |
(40) |
(297) |
2,100 |
Large customer bankruptcy |
(372) |
393 |
395 |
1,556 |
Loss on extinguishment of debt |
-- |
-- |
387 |
-- |
Adjusted EBITDA |
$13,205 |
$7,992 |
$38,999 |
$31,122 |
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¹ 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 the company
expected to collect from a customer that recently declared
bankruptcy, loss on extinguishment of debt, acquisition related
expenses including post-acquisition adjustment of contingent
purchase price and transactional expenses, and amounts for
settlement of a class action lawsuit, minus a reduction in the
amount the Company was required to pay in final settlement of the
class action lawsuit. The Company's 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. |
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For more information regarding
the use of Adjusted EBITDA, see Mistras Group, Inc.'s current
report on Form 8-K filed with the Securities and Exchange
Commission on August 10, 2010. |
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** In the fourth quarter of 2010,
the Company adjusted its methodology for computing its liability
for workers' compensation claims in its Services segment. The
Company recorded a favorable adjustment of $760 in the period
consisting of a $631 reduction in cost of revenues and a $129
reduction in selling, general and administration expenses. A
portion of this adjustment related to prior fiscal periods;
however, this was not material to any prior period. The after
tax impact of this adjustment was approximately 0.5% of fourth
quarter revenues. |
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CONTACT: Mistras Group, Inc.
Frank Joyce, Chief Financial Officer
609-716-4103
www.mistrasgroup.com
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