Mistras Group, Inc. (NYSE:MG), a leading "one source" global
provider of technology-enabled asset protection solutions, today
reported financial results for its second quarter and first half of
fiscal 2014, which ended November 30, 2013.
During the second quarter, the Company had revenue of $156.8
million, an increase of 13.8% over the prior year period. Net
income for the second quarter was $9.3 million, or $0.32 per
diluted share compared with net income of $9.2 million or $0.32 per
diluted share in the prior year period. Adjusted EBITDA* was $22.6
million in the quarter compared with $23.9 million in the prior
year period.
During the first half of fiscal 2014, the Company had revenue of
$292.6 million, an increase of 16.5% over the prior year period.
Net income for the first half was $14.9 million, or $0.51 per
diluted share, compared with net income of $13.4 million or $0.46
per diluted share in the prior year period. Adjusted EBITDA* was
$38.6 million in the first half compared with $39.3 million in the
prior year period.
Included in results for the second quarter and first half of
fiscal 2014 were favorable pre-tax net acquisition-related
adjustments of $0.4 million and $2.5 million, respectively, which
favorably impacted earnings per diluted share by $0.01 in the
second quarter and $0.06 in the first half.
Financial Highlights:
Revenues
- Revenues for the second quarter of fiscal 2014 increased 13.8%
over prior year, including 4.3% organic growth and 9.4% acquisition
growth.
- Revenues for the first half of fiscal 2014 increased by 16.5%,
consisting of 4.4% organic growth and 12.2% acquisition growth. Due
to key contract wins, organic growth for fiscal year 2014 is still
expected to be within a range of from 7% to 12%.
- Organic revenue for the Services segment grew 2% during the
second quarter compared with a robust prior year result, and 8%
during the first half due to continued strength in our key market
segments.
- The International segment grew organically by 17% during the
second quarter and improved its first half organic growth to
2.5%.
- The Products and Systems segment had 2% organic revenue growth
in the second quarter but experienced a revenue decline of 15% in
the first half of the fiscal year compared with the prior year,
mainly due to the impact of the government sequester.
Gross Profit
- Gross Profit grew by 14% over prior year during the second
quarter of fiscal 2014 and by 15% during the first half.
- Gross margin for the second quarter was 30.6% of revenues vs.
30.4% in the prior year.
- Gross margin for the first half was 29.8% of revenues vs. 30.1%
in the prior year. The slight decrease was driven by costs incurred
to enable future growth, higher fringe benefit rates in our
Services segment, and lower sales in our high margin Products and
Systems segment.
Operating Cash Flow
- The Company's operating cash flow was $15.6 million for the
first half of fiscal 2014.
Sotirios Vahaviolos, Mistras Chairman and Chief Executive
Officer stated, "We achieved strong results in the second quarter
and first half of fiscal 2014 compared with robust prior year
results. Mistras was awarded several new contracts, and was chosen
by a key customer to be their exclusive provider for a large
multi-year contract at one of their largest facilities in the
United States. The Company's second quarter results included
increased costs to secure these contracts and to continue building
its capabilities to support future growth, especially in
Canada."
"We remain optimistic about the continued health of the market
especially within the North American oil & gas industry for the
next several years, driven by consumer demand for energy, combined
with our customers' needs to improve safety and comply with the
ever growing environmental regulations. We are also very pleased
with our recent contract wins and the feedback and receptivity from
our customers toward our employees and our company's value based
service offerings."
Dr. Vahaviolos added, "Unlike last year at this time, we are
looking forward to a robust spring turnaround season which will
accelerate the growth we experienced in the first half of our
fiscal year. This improved environment, coupled with our recent
market share gains, improving international results and strategic
acquisitions, has led us to increase our guidance for fiscal 2014
results while meeting our organic growth goals."
Outlook and Guidance for Fiscal 2014
The Company is increasing its previously issued guidance for
fiscal 2014 revenues and Adjusted EBITDA*. Previously the Company
expected revenue to be in the range of from $570 million to $600
million, and Adjusted EBITDA* to be in the range of $74 million to
$80 million. The Company now expects that its revenue will be in
the range of $590 million to $615 million, and Adjusted EBITDA*
will be in a range of from $77 million to $83 million.
Conference Call
In connection with this release, Mistras will hold a conference
call on Thursday, January 9, 2014 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 1-866-314-5232
and use confirmation code 33910996 when prompted. The International
dial-in number is 1-617-213-8052.
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 2013
filed with the Securities and Exchange Commission on August 14,
2013, 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
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 "EBITDA", "Segment and Total Company Income from
Operations before Acquisition-Related Expense (Benefit), net", "Net
Income Excluding Acquisition-related Items" and "Diluted EPS
Excluding Acquisition-related Items," reconciling these
measurements to financial measurements under US GAAP. 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 |
Condensed Consolidated
Balance Sheets |
(in thousands, except
share and per share data) |
|
|
|
|
|
|
|
November 30,
2013 |
May 31, 2013 |
ASSETS |
|
|
Current Assets |
|
|
Cash and cash
equivalents |
$ 16,240 |
$ 7,802 |
Accounts receivable, net |
122,418 |
108,554 |
Inventories |
12,828 |
12,504 |
Deferred income taxes |
2,647 |
2,621 |
Prepaid expenses and other current
assets |
10,940 |
8,156 |
Total current assets |
165,073 |
139,637 |
Property, plant and equipment, net |
70,517 |
68,419 |
Deposit for business combination |
11,000 |
-- |
Intangible assets, net |
49,282 |
51,992 |
Goodwill |
118,679 |
115,270 |
Other assets |
1,315 |
1,342 |
Total assets |
$ 415,866 |
$ 376,660 |
|
|
|
LIABILITIES AND EQUITY |
|
|
Current Liabilities |
|
|
Accounts payable |
$ 11,273 |
$ 8,490 |
Accrued expenses and other current
liabilities |
46,967 |
47,839 |
Current portion of long-term debt |
7,899 |
7,418 |
Current portion of capital lease
obligations |
6,760 |
6,766 |
Income taxes payable |
1,198 |
1,703 |
Total current liabilities |
74,097 |
72,216 |
Long-term debt, net of current portion |
70,799 |
52,849 |
Obligations under capital leases, net of
current portion |
10,728 |
10,923 |
Deferred income taxes |
12,629 |
11,614 |
Other long-term liabilities |
17,760 |
18,778 |
Total liabilities |
186,013 |
166,380 |
|
|
|
Commitments and contingencies |
|
|
|
|
|
Equity |
|
|
Preferred stock, 10,000,000 shares
authorized |
-- |
-- |
Common stock, $0.01 par value,
200,000,000 shares authorized, 28,382,851 and 28,210,862
shares issued and outstanding as of November 30, 2013 and May 31,
2013, respectively |
283 |
282 |
Additional paid-in capital |
197,462 |
195,241 |
Retained earnings |
33,880 |
18,982 |
Accumulated other comprehensive loss |
(2,020) |
(4,452) |
Total Mistras Group, Inc. stockholders'
equity |
229,605 |
210,053 |
Noncontrolling interests |
248 |
227 |
Total equity |
229,853 |
210,280 |
Total liabilities and equity |
$ 415,866 |
$ 376,660 |
|
|
|
Mistras Group, Inc. and
Subsidiaries |
Condensed Consolidated
Statements of Income |
(in thousands, except
per share data) |
|
|
|
|
|
|
|
|
|
|
|
Three
months ended November 30, |
Six months
ended November 30, |
|
2013 |
2012 |
2013 |
2012 |
Revenues: |
|
|
|
|
Services |
$ 143,139 |
$ 127,731 |
$ 271,481 |
$ 226,956 |
Products and systems |
13,616 |
9,998 |
21,112 |
24,160 |
Total revenues |
156,755 |
137,729 |
292,593 |
251,116 |
Cost of revenues: |
|
|
|
|
Cost of services |
98,860 |
87,044 |
187,484 |
157,560 |
Cost of products and systems sold |
5,634 |
4,485 |
9,263 |
9,495 |
Depreciation related to services |
4,026 |
4,124 |
8,076 |
8,100 |
Depreciation related to products and
systems |
258 |
171 |
516 |
339 |
Total cost of revenues |
108,778 |
95,824 |
205,339 |
175,494 |
Gross profit |
47,977 |
41,905 |
87,254 |
75,622 |
|
|
|
|
|
Selling, general and administrative
expenses |
29,849 |
23,362 |
58,548 |
46,854 |
Research and engineering |
786 |
530 |
1,429 |
1,047 |
Depreciation and amortization |
2,501 |
2,167 |
4,958 |
4,062 |
Acquisition-related expense, net |
(411) |
99 |
(2,508) |
206 |
Income from operations |
15,252 |
15,747 |
24,827 |
23,453 |
Interest expense |
772 |
816 |
1,517 |
1,576 |
Income before provision for income
taxes |
14,480 |
14,931 |
23,310 |
21,877 |
Provision for income taxes |
5,196 |
5,745 |
8,391 |
8,400 |
Net income |
9,284 |
9,186 |
14,919 |
13,477 |
Less: net income attributable to
noncontrolling interests, net of taxes |
(27) |
(23) |
(21) |
(33) |
Net income attributable to Mistras Group,
Inc. |
$ 9,257 |
$ 9,163 |
$ 14,898 |
$ 13,444 |
Earnings per common share |
|
|
|
|
Basic |
$ 0.33 |
$ 0.33 |
$ 0.53 |
$ 0.48 |
Diluted |
$ 0.32 |
$ 0.32 |
$ 0.51 |
$ 0.46 |
Weighted average common shares
outstanding: |
|
|
|
|
Basic |
28,378 |
28,144 |
28,309 |
28,094 |
Diluted |
29,102 |
29,008 |
29,147 |
29,036 |
|
|
|
|
|
Mistras Group, Inc. and
Subsidiaries |
Unaudited Operating
Data by Segment |
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
Three
months ended November 30, |
Six months
ended November 30, |
|
2013 |
2012 |
2013 |
2012 |
Revenues |
|
|
|
|
Services |
$ 108,862 |
$ 105,213 |
$ 204,672 |
$ 187,610 |
International |
43,209 |
26,777 |
80,968 |
51,206 |
Products and Systems |
8,604 |
8,439 |
15,189 |
17,973 |
Corporate and
eliminations |
(3,920) |
(2,700) |
(8,236) |
(5,673) |
|
$ 156,755 |
$ 137,729 |
$ 292,593 |
$ 251,116 |
|
|
|
|
|
|
|
|
|
|
|
Three
months ended November 30, |
Six months
ended November 30, |
|
2013 |
2012 |
2013 |
2012 |
Gross
profit |
|
|
|
|
Services |
$ 30,918 |
$ 30,692 |
$ 57,665 |
$ 51,632 |
International |
13,293 |
7,299 |
23,413 |
14,380 |
Products and Systems |
3,718 |
3,975 |
6,102 |
9,220 |
Corporate and
eliminations |
48 |
(61) |
74 |
390 |
|
$ 47,977 |
$ 41,905 |
$ 87,254 |
$ 75,622 |
|
|
|
|
|
Mistras Group, Inc. and
Subsidiaries |
Unaudited
Reconciliation of |
Segment and Total
Company Income (Loss) from Operations before Acquisition-Related
Expense (Benefit), net (non-GAAP) to |
Segment and Total
Company Income (Loss) from Operations (GAAP) |
(in
thousands) |
|
|
|
|
|
|
Three
months ended November 30, |
Six months
ended November 30, |
|
2013 |
2012 |
2013 |
2012 |
Services: |
|
|
|
|
Income from operations before
acquisition-related expense, net (non-GAAP) |
$ 14,387 |
$ 16,284 |
$ 25,402 |
$ 23,260 |
Acquisition-related expense
(benefit), net |
(13) |
483 |
156 |
693 |
Income from operations
(GAAP) |
14,400 |
15,801 |
25,246 |
22,567 |
|
|
|
|
|
International: |
|
|
|
|
Income from operations before
acquisition-related expense, net (non-GAAP) |
$ 3,992 |
$ 1,343 |
$ 5,337 |
$ 3,052 |
Acquisition-related expense
(benefit), net |
(3,301) |
63 |
(3,771) |
181 |
Income from operations
(GAAP) |
7,293 |
1,280 |
9,108 |
2,871 |
|
|
|
|
|
Products and
Systems: |
|
|
|
|
Income from operations before
acquisition-related expense, net (non-GAAP) |
$ 450 |
$ 1,088 |
$ 25 |
$ 3,479 |
Acquisition-related (benefit),
net |
(19) |
(615) |
(1,035) |
(1,304) |
Income from operations
(GAAP) |
469 |
1,703 |
1,060 |
4,783 |
|
|
|
|
|
Corporate and
Eliminations: |
|
|
|
|
Income from operations before
acquisition-related (benefit), net (non-GAAP) |
$ (3,988) |
$ (2,869) |
$ (8,445) |
$ (6,132) |
Acquisition-related expense,
net |
2,922 |
168 |
2,142 |
636 |
(Loss) from operations
(GAAP) |
(6,910) |
(3,037) |
(10,587) |
(6,768) |
|
|
|
|
|
Total
Company |
|
|
|
|
Income from operations before
acquisition-related expense, net (non-GAAP) |
$ 14,841 |
$ 15,846 |
$ 22,319 |
$ 23,659 |
Acquisition-related expense
(benefit), net |
(411) |
99 |
(2,508) |
206 |
Income from operations
(GAAP) |
15,252 |
15,747 |
24,827 |
23,453 |
|
|
|
|
|
Mistras Group, Inc. and
Subsidiaries |
Unaudited
Reconciliation of Net Income to EBITDA and Adjusted
EBITDA |
(in
thousands) |
|
|
|
|
|
|
Three months
ended November 30, |
Six months
ended November 30, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Net Income |
$ 9,284 |
$ 9,186 |
$ 14,919 |
$ 13,477 |
Less: net income attributable to
noncontrolling interests, net of taxes |
(27) |
(23) |
(21) |
(33) |
Net income attributable to Mistras Group,
Inc. |
$ 9,257 |
$ 9,163 |
$ 14,898 |
$ 13,444 |
Interest expense |
772 |
816 |
1,517 |
1,576 |
Provision for income taxes |
5,196 |
5,745 |
8,391 |
8,400 |
Depreciation and amortization |
6,785 |
6,462 |
13,550 |
12,501 |
EBITDA |
$ 22,010 |
$ 22,186 |
$ 38,356 |
$ 35,921 |
Share-based compensation expense |
1,040 |
1,572 |
2,747 |
3,206 |
Acquisition-related expense, net |
(411) |
99 |
(2,508) |
206 |
Adjusted EBITDA |
$ 22,639 |
$ 23,857 |
$ 38,595 |
$ 39,333 |
|
|
|
|
|
Mistras Group, Inc. and
Subsidiaries |
Unaudited
Reconciliation of |
Net Income (GAAP)
and Diluted Earnings Per Share (GAAP) to |
Net Income Excluding
Acquisition-related Items (non-GAAP) and Diluted EPS Excluding
Acquisition-related Items (non-GAAP) |
(in thousands except
per share data) |
|
|
|
|
|
|
Three
months ended November 30, |
Six months
ended November 30, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Net income (GAAP) |
$ 9,284 |
$ 9,186 |
$ 14,919 |
$ 13,477 |
Acquisition-related expense (benefit), net of
tax |
(382) |
229 |
(1,755) |
288 |
Net Income Excluding Acquisition-related
Items (non-GAAP) |
$ 8,902 |
$ 9,415 |
$ 13,164 |
$ 13,765 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share (GAAP) |
$ 0.32 |
$ 0.32 |
$ 0.51 |
$ 0.46 |
Acquisition-related expense (benefit),
net |
(0.01) |
0.01 |
(0.06) |
0.01 |
Diluted EPS Excluding Acquisition-related
Items (non-GAAP) |
$ 0.31 |
$ 0.33 |
$ 0.45 |
$ 0.47 |
|
|
|
|
|
Note: Acquisition-related expense
(benefit), net of tax, includes income tax expense of $29 thousand
and $130 thousand for the three months ended November 30, 2013 and
2012, respectively and $753 thousand and $82 thousand for the six
months ended November 30, 2013 and 2012, respectively. The
aforementioned tax expenses are reflective of non-deductible and
non-taxable tax differences related to acquisitions of common
stock. |
|
|
|
|
|
CONTACT: Nestor S. Makarigakis
Group Director of Marketing Communications
marcom@mistrasgroup.com
1(609)716-4000
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