PRINCETON JUNCTION, N.J., April 8, 2015 (GLOBE NEWSWIRE) -- Mistras Group, Inc. (NYSE:MG), a leading "one source" global provider of technology-enabled asset protection solutions, today reported financial results for its third quarter and first nine months of fiscal year 2015, which ended February 28, 2015. Revenues increased by 7.5% over the prior year's third quarter, reaching $163.1 million. Net income for the third quarter was $1.8 million, or $0.06 per diluted share, compared with net income of $1.2 million or $0.04 per diluted share in the prior year period. Excluding acquisition-related items, net income in the third quarter of fiscal year 2015 was $0.2 million or $0.01 per diluted share, compared with $1.8 million or $0.06 per diluted share in the prior year's third quarter. Adjusted EBITDA was $11.0 million in the third quarter of fiscal year 2015 compared with $12.5 million in the prior year period. Revenues increased by 20.8% over prior year's first nine months, reaching $536.6 million. Net income for the first nine months was $13.9 million, or $0.47 per diluted share, compared with $16.1 million or $0.55 per diluted share in the prior year period. Excluding acquisition-related items, net income for the first nine months of fiscal year 2015 was $11.2 million or $0.38 per diluted share, compared with $15.0 million or $0.51 per diluted share in the prior year. Adjusted EBITDA was $52.4 million for the first nine months of fiscal year 2015 compared with $51.1 million in the prior year period. The Company's operations and profitability were adversely impacted by several factors during the third quarter of fiscal year 2015, including: Financial Highlights: Revenues Gross Profit Operating Cash Flow Sotirios Vahaviolos, Chairman and Chief Executive Officer stated, "After experiencing three consecutive quarters of over 20% year-on-year revenue growth, market conditions and customer sentiment have changed dramatically in recent months, driven by the significant drop in the price of oil. The impact of the ongoing refinery strike caused our organic Services revenue growth to turn slightly negative in the third quarter, while uncertainty concerning the oil price outlook has also caused some previously scheduled projects to be deferred." Dr. Vahaviolos continued, "These events impacted our Company during its weakest seasonal quarter. Even so, I am pleased with our cash flow and that our cost savings initiatives are beginning to have an impact. As expected we experienced strong cash collections and we were able to pay down debt by nearly $29 million during the third quarter. Operating expenses for the Services (excluding acquired companies) and Products and Systems segments declined compared with the prior year's third quarter, driven by cost-saving actions we have taken." Dr. Vahaviolos added, "The Company had already been engaged in constructive discussions with its key customers prior to these market factors becoming prominent, and I am optimistic that we will be able to work with our customers to achieve our mutual goals. As a leading inspection services provider, Mistras is able to deliver compelling customer solutions that best protect and extend the lives of their assets while realizing savings that can approach the fees that we charge. The relevance of these attributes is strongest at times like these." Outlook and Guidance for Fiscal 2015 Uncertainty concerning the price of oil has caused a significant change in customer sentiment that is causing many companies to reevaluate spending levels and the timing of projects. Based upon these factors, the Company now expects that its revenue levels for fiscal year 2015 will fall at the low end of its $720 million to $740 million range, and that its EBITDA level may fall somewhat short of its $78 to $84 million range. Conference Call In connection with this release, Mistras will hold a conference call on Thursday, April 9, 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 15338512 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. In this release, the term free cash flow, a non-GAAP measurement is also used. We define free cash flow as cash provided by operating activities less capital expenditures (which is classified as an investing activity). 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) February 28, 2015 May 31, 2014 ASSETS Current Assets Cash and cash equivalents $ 13,385 $ 10,020 Accounts receivable, net 125,548 137,824 Inventories 12,294 11,376 Deferred income taxes 3,886 3,283 Prepaid expenses and other current assets 16,309 12,626 Total current assets 171,422 175,129 Property, plant and equipment, net 80,125 77,811 Intangible assets, net 56,147 57,875 Goodwill 166,531 130,516 Deferred income taxes 1,214 1,344 Other assets 1,890 1,297 Total assets $ 477,329 $ 443,972 LIABILITIES AND EQUITY Current Liabilities Accounts payable $ 8,950 $ 14,978 Accrued expenses and other current liabilities 47,881 54,650 Current portion of long-term debt 16,906 8,058 Current portion of capital lease obligations 6,859 7,251 Income taxes payable 231 1,854 Total current liabilities 80,827 86,791 Long-term debt, net of current portion 109,322 68,590 Obligations under capital leases, net of current portion 12,780 13,664 Deferred income taxes 20,626 15,521 Other long-term liabilities 11,686 17,014 Total liabilities 235,241 201,580 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 206,289 201,831 Retained earnings 55,410 41,500 Accumulated other comprehensive loss (20,121) (1,511) Total Mistras Group, Inc. stockholders' equity 241,864 242,104 Noncontrolling interests 224 288 Total equity 242,088 242,392 Total liabilities and equity $ 477,329 $ 443,972 Mistras Group, Inc. and Subsidiaries Unaudited Condensed Consolidated Statements of Income (in thousands, except per share data) Three months ended February 28, Nine months ended February 28, 2015 2014 2015 2014 Revenues $ 163,100 $ 151,727 $ 536,566 $ 444,320 Cost of revenues 119,356 107,898 382,018 304,645 Depreciation related to products and systems 5,010 4,529 14,781 13,121 Gross profit 38,734 39,300 139,767 126,554 Selling, general and administrative expenses 32,758 31,794 105,158 90,342 Research and engineering 644 757 1,922 2,186 Depreciation and amortization 3,104 2,771 9,998 7,729 Acquisition-related (benefit), net (1,642) 978 (3,037) (1,530) Income from operations 3,870 3,000 25,726 27,827 Interest expense 1,161 792 3,418 2,309 Income before provision for income taxes 2,709 2,208 22,308 25,518 Provision for income taxes 941 984 8,457 9,375 Net income 1,768 1,224 13,851 16,143 Less: net (income) loss attributable to noncontrolling interests, net of taxes 49 (23) 59 (44) Net income attributable to Mistras Group, Inc. $ 1,817 $ 1,201 $ 13,910 $ 16,099 Earnings per common share Basic $ 0.06 $ 0.04 $ 0.49 $ 0.57 Diluted $ 0.06 $ 0.04 $ 0.47 $ 0.55 Weighted average common shares outstanding: Basic 28,656 28,396 28,583 28,338 Diluted 29,529 29,374 29,559 29,249 Mistras Group, Inc. and Subsidiaries Unaudited Operating Data by Segment (in thousands) Three months ended February 28, Nine months ended February 28, 2015 2014 2015 2014 Revenues Services $ 121,845 $ 109,122 $ 404,651 $ 313,794 International 33,554 38,064 114,610 119,032 Products and Systems 8,526 7,610 22,588 22,799 Corporate and eliminations (825) (3,069) (5,283) (11,305) $ 163,100 $ 151,727 $ 536,566 $ 444,320 Three months ended February 28, Nine months ended February 28, 2015 2014 2015 2014 Gross profit Services $ 27,429 $ 26,216 $ 101,452 $ 83,881 International 7,018 10,086 27,795 33,499 Products and Systems 4,211 3,674 10,203 9,776 Corporate and eliminations 76 (676) 317 (602) $ 38,734 $ 39,300 $ 139,767 $ 126,554 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 February 28, Nine months ended February 28, 2015 2014 2015 2014 Services: Income from operations before acquisition-related expense, net $ 7,082 $ 7,759 $ 36,819 $ 33,161 Acquisition-related (benefit) expense, net (175) 307 611 463 Income from operations 7,257 7,452 36,208 32,698 International: (Loss) Income from operations before acquisition-related expense (benefit), net $ (2,438) $ 189 $ (896) $ 5,526 Acquisition-related (benefit) expense, net (1,123) 105 (2,059) (3,666) (Loss) Income from operations (1,315) 84 1,163 9,192 Products and Systems: Income from operations before acquisition-related (benefit), net $ 1,346 $ 87 $ 1,330 $ 112 Acquisition-related (benefit), net — — — (1,035) Income from operations 1,346 87 1,330 1,147 Corporate and Eliminations: Loss from operations before acquisition-related (benefit) expense, net $ (3,762) $ (4,057) $ (14,564) $ (12,502) Acquisition-related (benefit) expense, net (344) 566 (1,589) 2,708 Loss from operations (3,418) (4,623) (12,975) (15,210) Total Company Income from operations before acquisition-related (benefit) expense, net $ 2,228 $ 3,978 $ 22,689 $ 26,297 Acquisition-related (benefit) expense, net (1,642) 978 (3,037) (1,530) Income from operations 3,870 3,000 25,726 27,827 Mistras Group, Inc. and Subsidiaries Unaudited Summary Cash Flow Information (in thousands) Nine months ended February 28, 2015 2014 Net cash provided by (used in): Operating Activities $ 34,317 $ 22,589 Investing Activities (46,433) (30,261) Financing Activities 15,511 11,251 Effect of exchange rate changes on cash (30) (1,431) Net change in cash and cash equivalents $ 3,365 $ 2,148 Mistras Group, Inc. and Subsidiaries Unaudited Reconciliation of Net Income to EBITDA and Adjusted EBITDA (in thousands) Three Months Ended Nine Months Ended February 28, February 28, 2015 2014 2015 2014 Net Income $ 1,768 $ 1,224 $ 13,851 $ 16,143 Less: net income attributable to noncontrolling interests, net of taxes 49 (23) 59 (44) Net income attributable to Mistras Group, Inc. $ 1,817 $ 1,201 $ 13,910 $ 16,099 Interest expense 1,161 792 3,418 2,309 Provision for income taxes 941 984 8,457 9,375 Depreciation and amortization 8,114 7,300 24,779 20,850 EBITDA $ 12,033 $ 10,277 $ 50,564 $ 48,633 Share-based compensation expense 599 1,266 4,856 4,013 Acquisition-related expense, net (1,642) 978 (3,037) (1,530) Adjusted EBITDA $ 10,990 $ 12,521 $ 52,383 $ 51,116 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) Three Months Ended Nine Months Ended February 28, February 28, 2015 2014 2015 2014 Net income (GAAP) $ 1,768 $ 1,224 $ 13,851 $ 16,143 Acquisition-related (benefit) expense, net of tax (1,554) 597 (2,697) (1,158) Net Income Excluding Acquisition-related Items (non-GAAP) $ 214 $ 1,821 $ 11,154 $ 14,985 Diluted earnings per common share (GAAP) $ 0.06 $ 0.04 $ 0.47 $ 0.55 Acquisition-related (benefit) expense, net (0.05) 0.02 (0.09) (0.04) Diluted EPS Excluding Acquisition-related Items (non-GAAP) $ 0.01 $ 0.06 $ 0.38 $ 0.51 CONTACT: Media Contact:
Nestor S. Makarigakis
Group Director of Marketing Communications
marcom@mistrasgroup.com
1(609)716-4000