Mistras Group, Inc. Reaffirms Expected 2017 Results and Sets Initial 2018 Outlook
January 17 2018 - 4:01PM
Mistras Group, Inc. (NYSE:MG), a leading "one source" global
provider of technology-enabled asset protection solutions, today
reaffirmed its expectation for 2017 results and set its initial
outlook for 2018.
Expectations for 2017 Results
- North American market conditions continued to show improvement,
and fall 2017 turnaround activity was improved over low comparable
levels in the fall of 2016;
- On the basis of strong fourth quarter performance, driven
primarily by its Services segment, the Company reaffirms its
earlier fiscal year 2017 revenue guidance of from $675 to $700
million and Adjusted EBITDA guidance of from $66 million to $70
million.
The reaffirmed guidance above is based upon management’s initial
review of its operating results for the fourth quarter of 2017 and
is subject to change based on the completion of the Company’s
year-end financial reporting process.
Initial Expectations for 2018The Company has
previously reported results for its Services segment both inclusive
and exclusive of results pertaining to a previously identified
challenged region which is dominated by a large customer contract
(the Challenged Region). The Company was recently notified that its
large customer within the Challenged Region plans to discontinue
using the Company’s services in Q2 of 2018, despite the Company’s
solid execution for this customer in 2017 as well as over the life
of the contract.
RevenuesThe Company expects revenues for this
specific customer within its Challenged Region to be reduced by
approximately $40 million in 2018. However, the Company further
expects that its consolidated revenues will increase on a net basis
in 2018, inclusive of this reduction. The Company expects it will
achieve double digit increases in revenues in its International and
Products and Systems segments, as well as in its Services segment,
exclusive of the Challenged Region. The Company expects the
following factors to drive this revenue growth:
- Market share gains with new customers;
- Increased volume with existing customers;
- Incremental revenues from recent acquisitions; and
- Foreign exchange impact related to weakness in the US
dollar
Profitability and Free Cash FlowAlthough the
loss of the large contract in the Challenged Region will have an
adverse impact upon the Company’s results, the Company expects that
its consolidated operating income and adjusted EBITDA will
experience a significant net increase in 2018, driven by the same
factors listed above, as well as by the beneficial impact of the
Company’s 2017 cost reduction program. The Company further expects
that its margin of Adjusted EBITDA to revenues will increase by
more than 100 basis points, and that it will generate more than $50
million of free cash flow (defined as net cash provided by
operating activities, less capital expenditures) in 2018.
Concerning the loss of this large contract, Chief Executive
Officer Dennis Bertolotti stated, "We were extremely disappointed
to have our customer tell us it was changing service providers even
though we helped them achieve cost savings while meeting customer
production and safety goals. We have considered this
particular region to be challenged because it is dominated by this
large customer, who has publicly stated that it is losing money in
this region and facing tremendous cost pressures. Because the
Company’s workforce on this contract is the Company’s only
unionized workforce of size within the United States, we do not
believe this situation is representative of our broader business
and we do not expect this type of situation to reoccur."
Regarding the Company’s outlook for 2018, Mr. Bertolotti stated,
“We feel very good about our overall business. Market dynamics are
improving and petroleum prices are increasing as well. The spring
turnaround season looks promising for many of our customers,
especially compared with reduced spending levels that occurred in
the spring of 2017. We expect double digit growth across each of
our segments, excluding the impact of the Challenged Region, and I
am excited about our prospects.”
Conference CallIn connection with this release,
Mistras will hold a conference call on January 18, 2018 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 5239037 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 Transition Report on Form 10-K filed with the
Securities and Exchange Commission on March 20, 2017, 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.
Media ContactNestor S. MakarigakisGroup Director of Marketing
Communicationsmarcom@mistrasgroup.com1 (609) 716-4000
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