Highlights of the Fourth Quarter
2017*
Mistras Group, Inc. (NYSE:MG), a leading "one source" global
provider of technology-enabled asset protection solutions, reported
financial results for its fourth quarter ended December 31, 2017.
Consolidated revenues for the fourth quarter of 2017 were $187.6
million, 10% higher than the prior year period of $170.2 million.
Services segment revenues were $146.0 million for the fourth
quarter of 2017, 17% higher than $124.3 million in the prior
year. The increase in revenues were due to the combined
effect of organic growth coupled with acquisition expansion.
Pre-tax income for the fourth quarter of 2017 was $5.0 million,
140% higher than the prior year of $2.1 million. Fourth
quarter 2017 net income was $0.9 million or $0.03 per diluted
share, versus net income of $1.0 million or $0.03 per diluted share
in the prior year period. Fourth quarter 2017 results included the
following special items:
- The impact of the Tax Act passed on December 22, 2017 which
resulted in a net charge of $1.9 million in in the fourth quarter
of 2017. The residual impact of the Tax Act, (exclusive of
the following net-of-tax special items) reduced net income by $1.6
million or $0.05 per diluted share
- Acquisition-related expense net; reduced operating income by
$1.1 million ($0.9 million net-of-tax)
- A reserve was increased for a litigation settlement; reduced
operating income by $0.4 million ($0.5 million net-of-tax)
- Severance pertaining to cost reductions; reduced operating
income by $0.9 million ($0.6 million net-of-tax)
Excluding these special items, which include the total impact of
the Tax Act, the Company’s net income would have been $4.4 million,
or $0.15 per diluted share for the fourth quarter of 2017. All of
these net-of-tax amounts are inclusive of the impact of the Tax Act
passed on December 22, 2017.
Adjusted EBITDA for the fourth quarter was $17.8 million, 24%
higher than the prior year amount of $14.4 million.The Company
generated $55.2 million of cash flows from operating activities and
$34.7 million of free cash flow for full year 2017, both of which
were reduced by the $6.3 million payment of a prior year legal
settlement. The Company used its free cash flow to repurchase $15.9
million of common stock and partially fund its acquisitions.
The Company’s net debt (total debt of $181.5 million less cash
and cash equivalents of $27.5 million) was $154.0 million at
December 31, 2017. compared to $92.0 million at September 30, 2017.
This increase in net debt was primarily attributable to the West
Penn Acquisition which closed during the fourth quarter of
2017.
Performance by segment was as follows:
Services segment Q4 revenues increased by $21.7
million or 17% over prior year, attributable to high-single digit
positive organic growth coupled with mid-single digit positive
acquisition growth. Services segment gross profit margin improved
by 170 bps year-over-year, resulting in an operating income
improvement of $8.6 million, or 126% over prior year.
International segment Q4 revenues decreased by
$5.6 million or 13% compared with prior year. International segment
revenues were adversely impacted a double digit organic decline,
offset by mid-single digit favorable impact of foreign exchange
rates. International segment Q4 operating
income declined by $4.3 million or 108% compared with prior
year. These declines were driven by reductions in Germany and
in the UK.
Products and Systems segment Q4 revenue
increased by $0.3 million or 5% compared with prior year. Products
and Systems segment Q4 operating income was essentially breakeven
compared with a $0.7 million loss in the prior year period.
Chief Executive Officer Dennis Bertolotti stated, "I am
particularly pleased with the performance of our Services segment
in the quarter. As expected, market conditions throughout the
second half of 2017 turned positive compared with an unusually low
level of prior year activity. Our 2017 acquisitions are also
performing above expectations.”
Mr. Bertolotti additionally stated, “We are working diligently
to position the Company for its next phase of growth. We
restructured the Services segment leadership team earlier in 2017
and as our Q4 results demonstrate, we are already seeing benefits
from increased focus and accountability. Given stable
petroleum prices, a growing aerospace business and our push into
mechanical services expansion, this should enable strong
improvement in 2018 and in the years to come.”
Mr. Bertolotti concluded, stating “In addition to these
initiatives, we are also making steady progress on our previously
announced $5 million cost reduction program. Our acquisition
pipeline is also active with potential opportunities to grow and to
diversify our Services business. We intend to continue to pursue
this growth avenue to take advantage of what we expect will be a
market that continues to improve throughout 2018.”
Guidance for 2018The Company is introducing its
planning assumptions and guidance for 2018. The Company
expects that the present range for petroleum prices will persist
for the foreseeable future, causing oil and gas customer spend for
inspection services to be relatively stable. Information obtained
from North American oil and gas customers suggests that their
spending in the first half of 2018 will continue to improve over
2017 and the Company’s results are expected to reflect this
dynamic.
The Company recently announced that a large customer plans to
discontinue using the Company’s services beginning in the second
quarter of 2018. Inclusive of this event, we expect Services
Segment revenues to increase by approximately 1% to 3%, instead of
approximately 10% that we had been planning. Services segment
operating margins are expected to increase by 150 basis points in
2018, driven by improved levels of business and the beneficial
impact of cost reductions made in 2017.
International segment revenues are expected to improve by
approximately 10%, driven by a mix of organic growth and foreign
exchange benefit from a weaker US dollar. International
segment operating margins are expected to increase by more than 400
basis points in 2018, driven by the beneficial impact of expected
organic growth and cost reductions made in 2017.
Products and Systems segment revenues are expected to decline
somewhat, as the impact of expected organic growth from core
operations is more than offset by lost revenues from a subsidiary
that is held for sale.
Total revenues for 2018 are expected to be between $715 million
to $730 million. The Company’s adjusted EBITDA is expected to
increase by 22% to 30% over 2017, to between $78 million and $83
million. The Company is still assessing the impact of the
recent tax reform act on the Company’s effective tax rate for
2018.
The Company expects that its operating cash flow will
approximate $70 million. Capital expenditures are expected to
be between $15 million and $20 million.
Conference CallIn connection with this release,
Mistras will hold a conference call on March 13, 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
dial 1-844-832-7227 and use confirmation code 4199929 when
prompted. The International dial-in number is 1-224-633-1529.
Those who wish to listen to the call later can access an archived
copy of the conference call at the Mistras Website.
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 or contact Nestor S. Makarigakis, Group
Director, Marketing Communications at marcom@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.
Use of Non-GAAP Measures
In addition to financial information prepared in accordance with
generally accepted accounting principles in the U.S. (GAAP), this
press release also contains adjusted financial measures that we
believe provide investors and management with supplemental
information relating to operating performance and trends that
facilitate comparisons between periods and with respect to
projected information. The term "Adjusted EBITDA" used in this
release is a financial measurement not calculated in accordance
with GAAP and is defined as net income attributable to Mistras
Group, Inc. plus: interest expense, provision for income taxes,
depreciation and amortization, share-based compensation expense and
certain acquisition related costs (including transaction due
diligence costs and adjustments to the fair value of contingent
consideration), foreign exchange (gain) loss and, if applicable,
certain special items which are noted. A Reconciliation of Adjusted
EBITDA to a financial measurement under 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 measurement” “Segment
and Total Company Income (Loss) Before Special Items”, reconciling
these measurements to financial measurements under GAAP. The
Company uses the term “free cash flow”, a non-GAAP measurement the
Company defines as cash provided by operating activities less
capital expenditures (which is classified as an investing
activity). The Company also uses the term “net debt”, a
non-GAAP measurement defined as the sum of the current and
long-term portions of long-term debt and capital lease obligations,
less cash and cash equivalents.
Media Contact:Nestor S. Makarigakis, Group
Director of Marketing Communicationsmarcom@mistrasgroup.com1 (609)
716-4000
Mistras Group, Inc. and
SubsidiariesConsolidated Balance
Sheets(in thousands, except share and per share
data) |
|
|
|
December 31, |
|
|
2017 |
|
2016 |
ASSETS |
|
|
|
|
Current Assets |
|
|
|
|
Cash and
cash equivalents |
|
$ |
27,541 |
|
|
$ |
19,154 |
|
Accounts
receivable, net |
|
138,080 |
|
|
130,852 |
|
Inventories |
|
10,503 |
|
|
10,017 |
|
Deferred
income taxes |
|
— |
|
|
6,230 |
|
Prepaid
expenses and other current assets |
|
18,884 |
|
|
16,399 |
|
Total
current assets |
|
195,008 |
|
|
182,652 |
|
Property, plant and
equipment, net |
|
87,143 |
|
|
73,149 |
|
Intangible assets,
net |
|
63,739 |
|
|
40,007 |
|
Goodwill |
|
203,438 |
|
|
169,940 |
|
Deferred income
taxes |
|
1,606 |
|
|
1,086 |
|
Other assets |
|
3,507 |
|
|
2,593 |
|
Total
Assets |
|
$ |
554,441 |
|
|
$ |
469,427 |
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
Current
Liabilities |
|
|
|
|
Accounts
payable |
|
$ |
10,362 |
|
|
$ |
6,805 |
|
Accrued
expenses and other current liabilities |
|
65,561 |
|
|
58,697 |
|
Current
portion of long-term debt |
|
2,358 |
|
|
1,379 |
|
Current
portion of capital lease obligations |
|
5,875 |
|
|
6,488 |
|
Income
taxes payable |
|
6,069 |
|
|
4,342 |
|
Total
current liabilities |
|
90,225 |
|
|
77,711 |
|
Long-term debt, net of
current portion |
|
164,520 |
|
|
85,917 |
|
Obligations under
capital leases, net of current portion |
|
8,738 |
|
|
9,682 |
|
Deferred income
taxes |
|
8,803 |
|
|
17,584 |
|
Other long-term
liabilities |
|
11,363 |
|
|
7,789 |
|
Total
Liabilities |
|
283,649 |
|
|
198,683 |
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
Preferred
stock, 10,000,000 shares authorized |
|
— |
|
|
— |
|
Common
stock, $0.01 par value, 200,000,000 shares authorized, 28,294,968
and 29,216,745 shares issued |
|
282 |
|
|
292 |
|
Additional paid-in capital |
|
222,425 |
|
|
217,211 |
|
Treasury
stock at cost, 0 and 420,258 shares |
|
— |
|
|
(9,000 |
) |
Retained
earnings |
|
64,717 |
|
|
91,803 |
|
Accumulated other comprehensive loss |
|
(16,805 |
) |
|
(29,724 |
) |
Total
Mistras Group, Inc. stockholders’ equity |
|
270,619 |
|
|
270,582 |
|
Non-controlling
interests |
|
173 |
|
|
162 |
|
Total
Equity |
|
270,792 |
|
|
270,744 |
|
Total
Liabilities and Equity |
|
$ |
554,441 |
|
|
$ |
469,427 |
|
|
|
|
|
|
|
|
|
|
Mistras Group, Inc. and
SubsidiariesConsolidated Statements of Income
(Loss)(in thousands, except per share
data) |
|
|
For the three months ended December
31, |
|
For the year
ended December 31, |
|
2017 |
|
2016(unaudited) |
|
2017 |
|
2016(unaudited) |
|
|
|
|
|
|
|
|
Revenue |
$ |
187,643 |
|
|
$ |
170,156 |
|
|
$ |
700,970 |
|
|
$ |
684,762 |
|
Cost of
revenue |
132,093 |
|
|
116,902 |
|
|
492,238 |
|
|
468,929 |
|
Depreciation |
5,230 |
|
|
5,276 |
|
|
21,020 |
|
|
21,699 |
|
Gross
profit |
50,320 |
|
|
47,978 |
|
|
187,712 |
|
|
194,134 |
|
Selling,
general and administrative expenses |
39,535 |
|
|
41,648 |
|
|
153,025 |
|
|
148,914 |
|
Impairment charges |
— |
|
|
— |
|
|
15,810 |
|
|
— |
|
Research
and engineering |
521 |
|
|
742 |
|
|
2,272 |
|
|
2,670 |
|
Depreciation and amortization |
2,510 |
|
|
2,549 |
|
|
10,363 |
|
|
10,689 |
|
Acquisition-related expense (benefit), net |
1,071 |
|
|
94 |
|
|
482 |
|
|
(5 |
) |
Litigation charges |
400 |
|
|
— |
|
|
1,600 |
|
|
6,320 |
|
Income from
operations |
6,283 |
|
|
2,945 |
|
|
4,160 |
|
|
25,546 |
|
Interest
expense |
1,273 |
|
|
857 |
|
|
4,386 |
|
|
3,075 |
|
Income (loss)
before provision for income taxes |
5,010 |
|
|
2,088 |
|
|
(226 |
) |
|
22,471 |
|
Provision
for income taxes |
4,141 |
|
|
1,100 |
|
|
1,942 |
|
|
8,008 |
|
Net income
(loss) |
869 |
|
|
988 |
|
|
(2,168 |
) |
|
14,463 |
|
Less: net
(loss) income attributable to non-controlling interests, net of
taxes |
(15 |
) |
|
25 |
|
|
7 |
|
|
54 |
|
Net income
(loss) attributable to Mistras Group, Inc. |
$ |
884 |
|
|
$ |
963 |
|
|
$ |
(2,175 |
) |
|
$ |
14,409 |
|
Earnings (loss) per
common share: |
|
|
|
|
|
|
|
Basic |
$ |
0.03 |
|
|
$ |
0.03 |
|
|
$ |
(0.08 |
) |
|
$ |
0.50 |
|
Diluted |
$ |
0.03 |
|
|
$ |
0.03 |
|
|
$ |
(0.08 |
) |
|
$ |
0.48 |
|
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
28,294 |
|
|
28,943 |
|
|
28,422 |
|
|
28,960 |
|
Diluted |
29,410 |
|
|
29,920 |
|
|
28,422 |
|
|
30,114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Operating Data by
Segment(in thousands) |
|
|
For the three months ended December
31, |
|
For the year
ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues |
|
|
|
|
|
|
|
Services |
$ |
146,000 |
|
|
$ |
124,289 |
|
|
$ |
543,565 |
|
|
$ |
519,378 |
|
International |
37,906 |
|
|
43,486 |
|
|
144,265 |
|
|
148,761 |
|
Products
and Systems |
6,372 |
|
|
6,094 |
|
|
23,297 |
|
|
26,049 |
|
Corporate
and eliminations |
(2,635 |
) |
|
(3,713 |
) |
|
(10,157 |
) |
|
(9,426 |
) |
|
$ |
187,643 |
|
|
$ |
170,156 |
|
|
$ |
700,970 |
|
|
$ |
684,762 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended December
31, |
|
For the year
ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Gross
profit |
|
|
|
|
|
|
|
Services |
$ |
38,728 |
|
|
$ |
30,880 |
|
|
$ |
139,160 |
|
|
$ |
133,532 |
|
International |
9,255 |
|
|
14,699 |
|
|
38,974 |
|
|
48,372 |
|
Products
and Systems |
2,485 |
|
|
2,481 |
|
|
9,798 |
|
|
11,956 |
|
Corporate
and eliminations |
(148 |
) |
|
(82 |
) |
|
(220 |
) |
|
274 |
|
|
$ |
50,320 |
|
|
$ |
47,978 |
|
|
$ |
187,712 |
|
|
$ |
194,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Reconciliation
ofSegment and Total Company Income (Loss) from
Operations (GAAP) to Income (Loss) before Special Items
(non-GAAP)(in thousands) |
|
|
For the three months
ended December 31, |
|
For the year
ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Services: |
|
|
|
|
|
|
|
Income
from operations (GAAP) |
$ |
15,466 |
|
|
$ |
6,856 |
|
|
$ |
46,677 |
|
|
$ |
37,788 |
|
Litigation charges |
— |
|
|
— |
|
|
— |
|
|
6,320 |
|
Bad debt
provision for a customer bankruptcy |
— |
|
|
— |
|
|
1,200 |
|
|
— |
|
Severance
costs |
69 |
|
|
34 |
|
|
561 |
|
|
77 |
|
Asset
write-offs and lease terminations |
— |
|
|
— |
|
|
123 |
|
|
— |
|
Acquisition-related expense (benefit), net |
440 |
|
|
(109 |
) |
|
392 |
|
|
(232 |
) |
Income
before special items (non-GAAP) |
15,975 |
|
|
6,781 |
|
|
48,953 |
|
|
43,953 |
|
International: |
|
|
|
|
|
|
|
(Loss)
income from operations (GAAP) |
(330 |
) |
|
3,983 |
|
|
3,537 |
|
|
12,908 |
|
Severance
costs |
600 |
|
|
384 |
|
|
1,055 |
|
|
1,184 |
|
Asset
write-offs and lease terminations |
— |
|
|
1,042 |
|
|
— |
|
|
1,042 |
|
Acquisition-related expense (benefit), net |
— |
|
|
11 |
|
|
(501 |
) |
|
(42 |
) |
Income
before special items (non-GAAP) |
270 |
|
|
5,420 |
|
|
4,091 |
|
|
15,092 |
|
Products and
Systems: |
|
|
|
|
|
|
|
Loss from
operations (GAAP) |
(77 |
) |
|
(740 |
) |
|
(16,991 |
) |
|
(180 |
) |
Impairment charges |
— |
|
|
— |
|
|
15,810 |
|
|
— |
|
Severance
costs |
18 |
|
|
14 |
|
|
18 |
|
|
31 |
|
Loss
before special items (non-GAAP) |
(59 |
) |
|
(726 |
) |
|
(1,163 |
) |
|
(149 |
) |
Corporate and
Eliminations: |
|
|
|
|
|
|
|
Loss from
operations (GAAP) |
(8,776 |
) |
|
(7,154 |
) |
|
(29,063 |
) |
|
(24,970 |
) |
Litigation charges |
400 |
|
|
— |
|
|
1,600 |
|
|
— |
|
Severance
costs |
184 |
|
|
— |
|
|
184 |
|
|
133 |
|
Acquisition-related expense (benefit), net |
631 |
|
|
192 |
|
|
591 |
|
|
269 |
|
Loss
before special items (non-GAAP) |
(7,561 |
) |
|
(6,962 |
) |
|
(26,688 |
) |
|
(24,568 |
) |
Total
Company: |
|
|
|
|
|
|
|
Income
from operations (GAAP) |
$ |
6,283 |
|
|
$ |
2,945 |
|
|
$ |
4,160 |
|
|
$ |
25,546 |
|
Litigation charges |
400 |
|
|
— |
|
|
1,600 |
|
|
6,320 |
|
Impairment charges |
— |
|
|
— |
|
|
15,810 |
|
|
— |
|
Bad debt
provision for a customer bankruptcy |
— |
|
|
— |
|
|
1,200 |
|
|
— |
|
Severance
costs |
871 |
|
|
432 |
|
|
1,818 |
|
|
1,425 |
|
Asset
write-offs and lease terminations |
— |
|
|
1,042 |
|
|
123 |
|
|
1,042 |
|
Acquisition-related expense (benefit), net |
1,071 |
|
|
94 |
|
|
482 |
|
|
(5 |
) |
Income
before special items (non-GAAP) |
$ |
8,625 |
|
|
$ |
4,513 |
|
|
$ |
25,193 |
|
|
$ |
34,328 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mistras Group, Inc. and
SubsidiariesSummary Cash Flow
Information(in thousands) |
|
|
For the year
ended December 31, |
|
2017 |
|
2016 |
Net cash provided by
(used in): |
|
|
(unaudited) |
Operating
activities |
$ |
55,239 |
|
|
$ |
63,211 |
|
Investing
activities |
(102,797 |
) |
|
(22,408 |
) |
Financing
activities |
53,605 |
|
|
(30,031 |
) |
Effect of exchange rate
changes on cash |
2,340 |
|
|
(1,217 |
) |
Net change in cash and
cash equivalents |
$ |
8,387 |
|
|
$ |
9,555 |
|
|
|
|
|
|
|
|
|
Mistras Group, Inc. and
SubsidiariesReconciliation of Net Cash Provided by
Operating Activities (GAAP) to Free Cash Flow
(non-GAAP)(in thousands) |
|
|
For the year ended December 31,
2017 |
GAAP: Net cash
provided by operating activities |
$ |
55,239 |
|
Less: |
|
Purchases of
property, plant and equipment |
(19,314 |
) |
Purchases of
intangible assets |
(1,255 |
) |
Non-GAAP: Free
cash flow |
$ |
34,670 |
|
|
|
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Reconciliation
ofNet Income (Loss) to Adjusted
EBITDA(in thousands) |
|
|
For the three months ended December
31, |
|
For the year
ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
$ |
869 |
|
|
$ |
988 |
|
|
$ |
(2,168 |
) |
|
$ |
14,463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: net
(loss) income attributable to non-controlling interests, net of
taxes |
(15 |
) |
|
25 |
|
|
7 |
|
|
54 |
|
Net income
(loss) attributable to Mistras Group, Inc. |
$ |
884 |
|
|
$ |
963 |
|
|
$ |
(2,175 |
) |
|
$ |
14,409 |
|
Interest expense |
1,273 |
|
|
857 |
|
|
4,386 |
|
|
3,075 |
|
Provision for income
taxes |
4,141 |
|
|
1,100 |
|
|
1,942 |
|
|
8,008 |
|
Depreciation and
amortization |
7,740 |
|
|
7,825 |
|
|
31,383 |
|
|
32,388 |
|
Share-based
compensation expense |
1,436 |
|
|
2,163 |
|
|
6,575 |
|
|
7,324 |
|
Litigation charges |
400 |
|
|
— |
|
|
1,600 |
|
|
6,320 |
|
Impairment charges |
— |
|
|
— |
|
|
15,810 |
|
|
— |
|
Acquisition-related
expense (benefit), net |
1,071 |
|
|
94 |
|
|
482 |
|
|
(5 |
) |
Severance |
871 |
|
|
433 |
|
|
1,818 |
|
|
1,425 |
|
Asset write-offs and
lease terminations |
— |
|
|
1,042 |
|
|
123 |
|
|
1,042 |
|
Bad debt provision for
unexpected customer bankruptcy |
— |
|
|
— |
|
|
1,200 |
|
|
— |
|
Foreign exchange (gain)
loss |
7 |
|
|
(107 |
) |
|
604 |
|
|
(1,461 |
) |
Adjusted EBITDA |
$ |
17,823 |
|
|
$ |
14,370 |
|
|
$ |
63,748 |
|
|
$ |
72,525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Reconciliation
ofNet Income (Loss) (GAAP) and Diluted EPS (GAAP)
to Net Income Excluding Special Items
(non-GAAP)and Diluted EPS Excluding Special Items
(non-GAAP)(in thousands, except per share
data) |
|
|
|
For the three months ended December
31, |
|
For the year ended December 31, |
|
|
2017 (1) |
|
2016 |
|
2017 (1) |
|
2016 |
Net income (loss)
(GAAP) |
|
$ |
884 |
|
|
$ |
963 |
|
|
$ |
(2,175 |
) |
|
$ |
14,409 |
|
Impairment charges |
|
— |
|
|
— |
|
|
11,860 |
|
|
— |
|
Severance |
|
617 |
|
|
289 |
|
|
1,249 |
|
|
967 |
|
Bad debt provision for
a customer bankruptcy |
|
— |
|
|
— |
|
|
908 |
|
|
— |
|
Asset write-offs and
lease terminations |
|
— |
|
|
691 |
|
|
82 |
|
|
691 |
|
Residual impact of tax
act |
|
1,565 |
|
|
— |
|
|
(662 |
) |
|
— |
|
Acquisition-related
expense (benefit), net |
|
874 |
|
|
(5 |
) |
|
251 |
|
|
96 |
|
Litigation charges |
|
461 |
|
|
— |
|
|
1,211 |
|
|
3,935 |
|
Net income Excluding
Special Items (non-GAAP) |
|
$ |
4,401 |
|
|
$ |
1,938 |
|
|
$ |
12,724 |
|
|
$ |
20,098 |
|
|
|
|
|
|
|
|
|
|
Diluted EPS (GAAP) |
|
$ |
0.03 |
|
|
$ |
0.03 |
|
|
$ |
(0.08 |
) |
|
$ |
0.48 |
|
Impairment charges |
|
— |
|
|
— |
|
|
0.40 |
|
|
— |
|
Severance |
|
0.02 |
|
|
0.01 |
|
|
0.04 |
|
|
0.03 |
|
Bad debt provision for
a customer bankruptcy |
|
— |
|
|
— |
|
|
0.03 |
|
|
— |
|
Asset write-offs and
lease terminations |
|
— |
|
|
0.02 |
|
|
0.01 |
|
|
0.02 |
|
Residual impact of tax
act |
|
0.05 |
|
|
— |
|
|
(0.02 |
) |
|
— |
|
Acquisition-related
expense (benefit), net |
|
0.03 |
|
|
— |
|
|
0.01 |
|
|
0.01 |
|
Litigation charges |
|
0.02 |
|
|
— |
|
|
0.04 |
|
|
0.13 |
|
Diluted EPS Excluding
Special Items (non-GAAP) |
|
$ |
0.15 |
|
|
$ |
0.06 |
|
|
$ |
0.43 |
|
|
$ |
0.67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) - On December 22, 2017, the United States enacted
fundamental changes to federal tax law following passage of the Tax
Act, (the “Tax Act”). Accordingly, during the three months ended
December 31, 2017, the Company recorded a net charge of $1.9
million attributable to three items; i) a charge of $3.9 million
due to the transition tax ii) a net tax benefit of $2.3 million due
to the remeasurement of federal deferred tax assets and liabilities
from 35% to 21% and iii) a $0.3 million charge attributable to
reducing deferred tax assets due to changes made to executive
compensation rules pursuant to the Tax Act. In reconciling
net income and diluted earnings per share to non-GAAP measures, the
Company allocated all the related tax effects inclusive of the Tax
Act, as recorded during three months ended December 31, 2017, to
the specific special items. The remaining tax impact of the Tax Act
was reflected as a residual impact in the non-GAAP reconciliation.
For the three months ended December 31, 2017, $0.3 million of net
expense is included net-of-tax within the special items and $1.6
million of net expense is reported as a residual impact. For the
year ended December 31, 2017, $2.6 million of net expense is
recorded net-of-tax within the special items and $0.7 million of
net benefit is reflected as a residual impact.
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