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 six
months of fiscal year 2015, which ended November 30, 2014.
Revenues increased by 32% over the prior year's second quarter,
reaching a record level of $206.9 million. Net income for the
second quarter achieved another record of $10.4 million, or $0.35
per diluted share, compared with the prior year second quarter's
net income of $9.3 million, or $0.32 per diluted share.
Acquisition-related items added $0.02 of earnings per diluted share
in the second quarter of fiscal year 2015 and $0.01 per diluted
share in the corresponding prior year period. Adjusted EBITDA rose
25% over the prior year's second quarter, to a record level of
$28.2 million compared with the prior year's $22.6 million.
Revenues increased by 28% over the prior year's first six
months, reaching $373.5 million. Net income for the first six
months was $12.1 million, or $0.41 per diluted share, compared with
the prior year's $14.9 million, or $0.51 per diluted share.
Adjusted EBITDA of $41.4 million in the first six months of fiscal
year 2015 was 7% higher than the comparable prior year amount of
$38.6 million.
The Company's year-on-year revenue growth remained robust,
exceeding 20% for the third consecutive quarter. The Company's
Services segment experienced strong year-on-year growth of over
48%, of which 22% was organic, driven by market share gains, a
healthy fall turnaround season, and project work. The Company's 32%
year-on-year revenue growth was led by a combination of
acquisitions (+19%) and strong organic growth (+14%), offset in
part by weaker foreign exchange (-1%).
Gross profit margins improved sequentially to 28.5% from 25.2%
in the first quarter of fiscal year 2015, but were lower than the
prior year's 30.6%. As with the Company's revenue growth, this
change was also driven primarily by the Services segment, which saw
gross profit margins improve to 27.5% from the first quarter's
24.4%, but lower than the prior year's 28.4%. The improvement from
the first quarter was driven by a seasonal uptick and healthy
turnaround volume, while the unfavorable comparison to the prior
year's second quarter was driven by the Company's continued
investment in the Canadian oil sands region, as well as an adverse
sales mix in some international countries.
Key Financial Metrics:
Revenues
- Revenues for the second quarter of fiscal 2015 increased 32%
over prior year. Organic revenue growth was 14%.
- Services segment revenue for the second quarter of fiscal 2015
increased 48% over prior year, including 22% organic growth and 26%
acquisition growth.
- International segment revenue for the second quarter of fiscal
2015 declined 5% vs. prior year, with components: organic (-5%),
acquisitions (+2%) and foreign exchange (-2%).
- Products and Systems segment revenues for the second quarter of
fiscal 2015 declined by 13% (all organic) compared with prior
year.
Gross Profit
- Gross profit for the second quarter of fiscal 2015 increased by
23% over prior year on a 32% increase in revenues;
- Gross margin for the second quarter of fiscal year 2015 was
28.5% of revenues vs. 30.6% in the prior year.
Operating Cash Flow
- The Company's operating cash flow was $3.2 million for the
first half of fiscal year 2015.
Sotirios Vahaviolos, Chairman and Chief Executive Officer
stated, "This was the strongest quarter that Mistras has ever had
in terms of Adjusted EBITDA, net income, earnings per diluted share
and revenue. The fact that this performance followed a difficult
first quarter makes it even more gratifying. We are very encouraged
by the continued strong organic revenue growth in our Services
segment and we continue to work on several initiatives to improve
our profit margins. Our progress to date is encouraging and bodes
well for future results."
Dr. Vahaviolos continued, "We are excited about our expansion
into two new areas, the Gulf offshore market, via our acquisition
of The Nacher Corporation, and our continued efforts to grow
organically in the Canadian oil sands region. NACHER has gotten off
to a fast start, helping to propel our acquisition-related revenue
growth, and we remain optimistic about our efforts in the Canadian
oil sands for the second half of the fiscal year."
Outlook and Guidance for Fiscal 2015
Based on the strong second quarter and additional upside from
NACHER, the Company is increasing its revenue expectation for
fiscal year 2015 to a range of $720 million to $740 million,
representing growth of 16% to 19% over prior year.
The Company expects its Adjusted EBITDA to be within the high
end of its previously announced range of from $78 million to $84
million, representing an increase of from 11% to 20% over prior
year.
Conference Call
In connection with this release, Mistras will hold a conference
call on Thursday, January 8, 2015 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 55599260 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 2014
filed with the Securities and Exchange Commission on August 8,
2014, 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) |
|
|
|
|
(unaudited) |
|
|
November 30,
2014 |
May 31, 2014 |
ASSETS |
|
|
Current Assets |
|
|
Cash and cash
equivalents |
$ 19,599 |
$ 10,020 |
Accounts receivable, net |
164,888 |
137,824 |
Inventories |
12,188 |
11,376 |
Deferred income taxes |
3,775 |
3,283 |
Prepaid expenses and other current
assets |
15,536 |
12,626 |
Total current assets |
215,986 |
175,129 |
Property, plant and equipment, net |
82,266 |
77,811 |
Intangible assets, net |
61,543 |
57,875 |
Goodwill |
169,088 |
130,516 |
Deferred income taxes |
1,301 |
1,344 |
Other assets |
1,887 |
1,297 |
Total assets |
$ 532,071 |
$ 443,972 |
|
|
|
LIABILITIES AND EQUITY |
|
|
Current Liabilities |
|
|
Accounts payable |
$ 15,558 |
$ 14,978 |
Accrued expenses and other current
liabilities |
54,594 |
54,650 |
Current portion of long-term debt |
17,988 |
8,058 |
Current portion of capital lease
obligations |
6,968 |
7,251 |
Income taxes payable |
2,133 |
1,854 |
Total current liabilities |
97,241 |
86,791 |
Long-term debt, net of current portion |
137,080 |
68,590 |
Obligations under capital leases, net of
current portion |
12,968 |
13,664 |
Deferred income taxes |
20,369 |
15,521 |
Other long-term liabilities |
14,699 |
17,014 |
Total liabilities |
282,357 |
201,580 |
|
|
|
Commitments and contingencies |
|
|
|
|
|
Equity |
|
|
Preferred stock, 10,000,000 shares
authorized |
-- |
-- |
Common stock, $0.01 par value,
200,000,000 shares authorized |
286 |
284 |
Additional paid-in capital |
204,987 |
201,831 |
Retained earnings |
53,593 |
41,500 |
Accumulated other comprehensive loss |
(9,427) |
(1,511) |
Total Mistras Group, Inc. stockholders'
equity |
249,439 |
242,104 |
Noncontrolling interests |
275 |
288 |
Total equity |
249,714 |
242,392 |
Total liabilities and equity |
$ 532,071 |
$ 443,972 |
|
|
Mistras Group, Inc. and
Subsidiaries |
Unaudited Condensed
Consolidated Statements of Income |
(in thousands, except
per share data) |
|
|
|
|
|
|
|
|
|
|
|
Three
months ended November 30, |
Six months
ended November 30, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
Revenue |
206,893 |
156,755 |
373,466 |
292,593 |
Cost of revenues |
142,940 |
104,494 |
262,662 |
196,747 |
Depreciation related to products and
systems |
4,914 |
4,284 |
9,771 |
8,592 |
Gross profit |
59,039 |
47,977 |
101,033 |
87,254 |
|
|
|
|
|
Selling, general and administrative
expenses |
37,180 |
29,849 |
72,400 |
58,548 |
Research and engineering |
629 |
786 |
1,278 |
1,429 |
Depreciation and amortization |
3,472 |
2,501 |
6,894 |
4,958 |
Acquisition-related expense, net |
(434) |
(411) |
(1,395) |
(2,508) |
Income from operations |
18,192 |
15,252 |
21,856 |
24,827 |
Interest expense |
1,352 |
772 |
2,257 |
1,517 |
Income before provision for income
taxes |
16,840 |
14,480 |
19,599 |
23,310 |
Provision for income taxes |
6,428 |
5,196 |
7,516 |
8,391 |
Net income |
10,412 |
9,284 |
12,083 |
14,919 |
Less: net loss (income) attributable to
noncontrolling interests, net of taxes |
15 |
(27) |
10 |
(21) |
Net income attributable to Mistras Group,
Inc. |
$ 10,427 |
$ 9,257 |
$ 12,093 |
$ 14,898 |
Earnings per common share |
|
|
|
|
Basic |
$ 0.36 |
$ 0.33 |
$ 0.42 |
$ 0.53 |
Diluted |
$ 0.35 |
$ 0.32 |
$ 0.41 |
$ 0.51 |
Weighted average common shares
outstanding: |
|
|
|
|
Basic |
28,619 |
28,378 |
28,547 |
28,309 |
Diluted |
29,397 |
29,102 |
29,551 |
29,147 |
|
|
Mistras Group, Inc. and
Subsidiaries |
Unaudited Operating
Data by Segment |
(in
thousands) |
|
|
|
|
|
|
Three
months ended November 30, |
Six months
ended November 30, |
|
2014 |
2013 |
2014 |
2013 |
Revenues |
|
|
|
|
Services |
$ 160,874 |
$ 108,862 |
$ 282,806 |
$ 204,672 |
International |
41,018 |
43,209 |
81,056 |
80,968 |
Products and Systems |
7,495 |
8,604 |
14,062 |
15,189 |
Corporate and
eliminations |
(2,494) |
(3,920) |
(4,458) |
(8,236) |
|
$ 206,893 |
$ 156,755 |
$ 373,466 |
$ 292,593 |
|
|
|
|
|
|
|
|
|
|
|
Three
months ended November 30, |
Six months
ended November 30, |
|
2014 |
2013 |
2014 |
2013 |
Gross
profit |
|
|
|
|
Services |
$ 44,252 |
$ 30,918 |
$ 74,023 |
$ 57,665 |
International |
11,309 |
13,293 |
20,777 |
23,413 |
Products and Systems |
3,328 |
3,718 |
5,992 |
6,102 |
Corporate and
eliminations |
150 |
48 |
241 |
74 |
|
$ 59,039 |
$ 47,977 |
$ 101,033 |
$ 87,254 |
|
|
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, |
|
2014 |
2013 |
2014 |
2013 |
Services: |
|
|
|
|
Income from operations before
acquisition-related expense (benefit), net (non-GAAP) |
$ 20,596 |
$ 14,387 |
$ 29,737 |
$ 25,402 |
Acquisition-related expense (benefit),
net |
525 |
(13) |
786 |
156 |
Income from operations (GAAP) |
20,071 |
14,400 |
28,951 |
25,246 |
|
|
|
|
|
International: |
|
|
|
|
Income from operations before
acquisition-related (benefit), net (non-GAAP) |
$ 2,130 |
$ 3,992 |
$ 1,542 |
$ 5,337 |
Acquisition-related (benefit),
net |
(1,047) |
(3,301) |
(936) |
(3,771) |
Income from operations (GAAP) |
3,177 |
7,293 |
2,478 |
9,108 |
|
|
|
|
|
Products and
Systems: |
|
|
|
|
Income from operations before
acquisition-related (benefit) net (non-GAAP) |
$ 417 |
$ 450 |
$ (16) |
$ 25 |
Acquisition-related (benefit),
net |
-- |
(19) |
-- |
(1,035) |
Income (loss) from operations
(GAAP) |
417 |
469 |
(16) |
1,060 |
|
|
|
|
|
Corporate and
Eliminations: |
|
|
|
|
Income from operations before
acquisition-related expense (benefit), net (non-GAAP) |
$ (5,385) |
$ (3,988) |
$ (10,802) |
$ (8,445) |
Acquisition-related expense (benefit)
net |
88 |
2,922 |
(1,245) |
2,142 |
(Loss) from operations (GAAP) |
(5,473) |
(6,910) |
(9,557) |
(10,587) |
|
|
|
|
|
Total Company |
|
|
|
|
Income from operations before
acquisition-related (benefit), net (non-GAAP) |
$ 17,758 |
$ 14,841 |
$ 20,461 |
$ 22,319 |
Acquisition-related (benefit),
net |
(434) |
(411) |
(1,395) |
(2,508) |
Income from operations (GAAP) |
18,192 |
15,252 |
21,856 |
24,827 |
|
|
Mistras Group, Inc. and
Subsidiaries |
Unaudited Summary of
Cash Flow Information |
(in
thousands) |
|
|
|
|
Six months
ended November 30, |
|
2014 |
2013 |
|
|
Net cash provided by (used
in): |
|
|
Operating Activities |
$ 3,230 |
$ 15,634 |
Investing Activities |
(40,666) |
(20,237) |
Financing Activities |
46,810 |
13,130 |
Effect of exchange rate changes on
cash |
205 |
(89) |
Net change in cash and cash
equivalents |
$ 9,579 |
$ 8,438 |
|
|
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, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
Net Income |
$ 10,412 |
$ 9,284 |
$ 12,083 |
$ 14,919 |
Less: net income attributable to
noncontrolling interests, net of taxes |
15 |
(27) |
10 |
(21) |
Net income attributable to Mistras Group,
Inc. |
$ 10,427 |
$ 9,257 |
$ 12,093 |
$ 14,898 |
Interest expense |
1,352 |
772 |
2,257 |
1,517 |
Provision for income taxes |
6,428 |
5,196 |
7,516 |
8,391 |
Depreciation and amortization |
8,386 |
6,785 |
16,665 |
13,550 |
EBITDA |
$ 26,593 |
$ 22,010 |
$ 38,531 |
$ 38,356 |
Share-based compensation expense |
2,090 |
1,040 |
4,257 |
2,747 |
Acquisition-related expense, net |
(434) |
(411) |
(1,395) |
(2,508) |
Adjusted EBITDA |
$ 28,249 |
$ 22,639 |
$ 41,393 |
$ 38,595 |
|
|
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, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
Net income (GAAP) |
$ 10,412 |
$ 9,284 |
$ 12,083 |
$ 14,919 |
Acquisition-related (benefit), net of
tax |
(532) |
(382) |
(1,143) |
(1,755) |
Net Income Excluding Acquisition-related
Items (non-GAAP) |
$ 9,880 |
$ 8,902 |
$ 10,940 |
$ 13,164 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share (GAAP) |
$ 0.35 |
$ 0.32 |
$ 0.41 |
$ 0.51 |
Acquisition-related (benefit), net |
(0.02) |
$ (0.01) |
(0.04) |
(0.06) |
Diluted EPS Excluding Acquisition-related
Items (non-GAAP) |
$ 0.33 |
$ 0.31 |
$ 0.37 |
$ 0.45 |
|
|
|
|
|
Note: Acquisition-related
(benefit), net of tax, includes income tax (benefit) expense of
$(99) thousand and $29 thousand for the three months ended November
30, 2014 and 2013, and $252 thousand and $753 thousand for the six
months ended November 30, 2014 and 2013. The aforementioned tax
expenses are reflective of non-deductible and non-taxable tax
differences related to acquisitions of common stock. |
CONTACT: Media Contact:
Nestor S. Makarigakis,
Group Director of Marketing Communications
marcom@mistrasgroup.com
1(609)716-4000
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