Record Annual Revenue of
Fiscal 2018 Gross Margin Expands to 28.0% from 26.8%; Gross Margins Expand in all segments
Fourth Quarter Margins of 28.9% Reach Highest Fourth Quarter Margin in Three Years
Highlights of the Fourth Quarter 2018*
- Q4 gross profit up 4% to
$52.3 million - Q4 gross margin expands 210 basis points to 28.9%, highest fourth quarter margin in three years
- Q4 net loss of
$1.1 million and non-GAAP net income of$1.7 million - Q4 adjusted EBITDA of
$16.1 million - Q4 cash flows from operating activities of
$17.5 million
Highlights of the Full Year 2018*
- FY gross profit of
$207.8 million increased 11% - FY gross margin of 28.0% increased by 120 bps
- FY net income of
$6.8 million and non-GAAP net income of$16.1 million - FY adjusted EBITDA up 15% to
$73.5 million - FY cash flows from operating activities was
$41.7 million
*- All comparisons are consolidated and versus the equivalent prior year period.
For the full year 2018, consolidated revenues grew 6% to a record
Chief Executive Officer
Performance by segment, both during the quarter and year to date was as follows:
Services segment fourth quarter revenues decreased by
International segment fourth quarter revenues decreased by
Products and Systems segment revenue decreased by
The Company generated
The Company’s net debt (total debt less cash and cash equivalents of
Guidance for 2019
The Company is introducing its planning assumptions and guidance for 2019.
Total revenues expected to be between $765 million to $785 million; Adjusted EBITDA expected to be between $90 million and $93 million; Capital expenditures expected to be up to $25 million; and Free cash flow expected to be between $42 million and $45 million. |
Year over year comparable will not be linear in 2019, because of the first quarter of 2019 lapping a year ago quarter that included more than
Conference Call
In connection with this release,
About
For more information, please visit the company's website at www.mistrasgroup.com or contact
Forward-Looking and Cautionary Statements
Certain statements made in this press release are "forward-looking statements" about
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
Media Contact:
marcom@mistrasgroup.com
1 (609) 716-4000
Consolidated Balance Sheets
(in thousands, except share and per share data)
December 31, | |||||||
2018 | 2017 | ||||||
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 25,544 | $ | 27,541 | |||
Accounts receivable, net | 148,324 | 138,080 | |||||
Inventories | 13,053 | 10,503 | |||||
Prepaid expenses and other current assets | 15,870 | 18,884 | |||||
Total current assets | 202,791 | 195,008 | |||||
Property, plant and equipment, net | 93,895 | 87,143 | |||||
Intangible assets, net | 111,395 | 63,739 | |||||
Goodwill | 279,259 | 203,438 | |||||
Deferred income taxes | 1,930 | 1,606 | |||||
Other assets | 4,767 | 3,507 | |||||
Total Assets | $ | 694,037 | $ | 554,441 | |||
LIABILITIES AND EQUITY | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 13,863 | $ | 10,362 | |||
Accrued expenses and other current liabilities | 73,895 | 65,561 | |||||
Current portion of long-term debt | 6,833 | 2,358 | |||||
Current portion of capital lease obligations | 3,922 | 5,875 | |||||
Income taxes payable | 1,958 | 6,069 | |||||
Total current liabilities | 100,471 | 90,225 | |||||
Long-term debt, net of current portion | 283,787 | 164,520 | |||||
Obligations under capital leases, net of current portion | 9,075 | 8,738 | |||||
Deferred income taxes | 23,148 | 8,803 | |||||
Other long-term liabilities | 6,482 | 11,363 | |||||
Total Liabilities | 422,963 | 283,649 | |||||
Commitments and contingencies | |||||||
Equity | |||||||
Preferred stock, 10,000,000 shares authorized | — | — | |||||
Common stock, $0.01 par value, 200,000,000 shares authorized, 28,562,608 and 28,294,968 shares issued | 285 | 282 | |||||
Additional paid-in capital | 226,616 | 222,425 | |||||
Retained earnings | 71,553 | 64,717 | |||||
Accumulated other comprehensive loss | (27,557 | ) | (16,805 | ) | |||
Total Mistras Group, Inc. stockholders’ equity | 270,897 | 270,619 | |||||
Non-controlling interests | 177 | 173 | |||||
Total Equity | 271,074 | 270,792 | |||||
Total Liabilities and Equity | $ | 694,037 | $ | 554,441 | |||
Consolidated Statements of Income (Loss)
(in thousands, except per share data)
For the three months ended December 31, (unaudited) | For the year ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue | $ | 180,762 | $ | 187,643 | $ | 742,354 | $ | 700,970 | |||||||
Cost of revenue | 122,892 | 132,093 | 512,024 | 492,238 | |||||||||||
Depreciation | 5,555 | 5,230 | 22,456 | 21,020 | |||||||||||
Gross profit | 52,315 | 50,320 | 207,874 | 187,712 | |||||||||||
Selling, general and administrative expenses | 44,120 | 39,535 | 166,352 | 153,025 | |||||||||||
Impairment charges | — | — | — | 15,810 | |||||||||||
Pension withdrawal expense | — | — | 5,886 | — | |||||||||||
Gain on sale of subsidiary | — | — | (2,384 | ) | — | ||||||||||
Research and engineering | 896 | 521 | 3,310 | 2,272 | |||||||||||
Depreciation and amortization | 3,122 | 2,510 | 11,957 | 10,363 | |||||||||||
Acquisition-related expense (benefit), net | 1,675 | 1,071 | 532 | 482 | |||||||||||
Litigation charges | — | 400 | — | 1,600 | |||||||||||
Income from operations | 2,502 | 6,283 | 22,221 | 4,160 | |||||||||||
Interest expense | 2,370 | 1,273 | 7,950 | 4,386 | |||||||||||
Income (loss) before provision for income taxes | 132 | 5,010 | 14,271 | (226 | ) | ||||||||||
Provision for income taxes | 1,197 | 4,141 | 7,426 | 1,942 | |||||||||||
Net (loss) income | (1,065 | ) | 869 | $ | 6,845 | $ | (2,168 | ) | |||||||
Less: net (loss) income attributable to noncontrolling interests, net of taxes | (4 | ) | (15 | ) | 9 | 7 | |||||||||
Net (loss) income attributable to Mistras Group, Inc. | $ | (1,061 | ) | $ | 884 | $ | 6,836 | $ | (2,175 | ) | |||||
(Loss) earnings per common share | |||||||||||||||
Basic | $ | (0.04 | ) | $ | 0.03 | $ | 0.24 | $ | (0.08 | ) | |||||
Diluted | $ | (0.04 | ) | $ | 0.03 | $ | 0.23 | $ | (0.08 | ) | |||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 28,541 | 28,294 | 28,406 | 28,422 | |||||||||||
Diluted | 28,541 | 29,410 | 29,427 | 28,422 | |||||||||||
Unaudited Operating Data by Segment
(in thousands)
For the three months ended December 31, | For the year ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues | |||||||||||||||
Services | $ | 139,966 | $ | 146,000 | $ | 574,619 | $ | 543,565 | |||||||
International | 37,210 | 37,906 | 153,448 | 144,265 | |||||||||||
Products and Systems | 6,139 | 6,372 | 23,426 | 23,297 | |||||||||||
Corporate and eliminations | (2,553 | ) | (2,635 | ) | (9,139 | ) | (10,157 | ) | |||||||
$ | 180,762 | $ | 187,643 | $ | 742,354 | $ | 700,970 | ||||||||
For the three months ended December 31, | For the year ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Gross profit | |||||||||||||||
Services | $ | 38,299 | $ | 38,728 | $ | 151,974 | $ | 139,160 | |||||||
International | 11,191 | 9,255 | 45,464 | 38,974 | |||||||||||
Products and Systems | 2,854 | 2,485 | 10,560 | 9,798 | |||||||||||
Corporate and eliminations | (29 | ) | (148 | ) | (124 | ) | (220 | ) | |||||||
$ | 52,315 | $ | 50,320 | $ | 207,874 | $ | 187,712 | ||||||||
Unaudited Reconciliation of
Segment and Total Company Income from Operations (GAAP) to Income before Special Items (non-GAAP)
(in thousands)
For the three months ended December 31, | For the year ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Services: | |||||||||||||||
Income from operations (GAAP) | $ | 10,234 | $ | 15,466 | $ | 47,126 | $ | 46,677 | |||||||
Pension withdrawal expense | — | — | 5,886 | — | |||||||||||
Bad debt provision for troubled customers | 650 | — | 650 | 1,200 | |||||||||||
Reorganization and other costs | 166 | 69 | 458 | 684 | |||||||||||
Acquisition-related expense, net | 1,385 | 440 | 576 | 392 | |||||||||||
Income before special items (non-GAAP) | 12,435 | 15,975 | 54,696 | 48,953 | |||||||||||
International: | |||||||||||||||
Income (loss) from operations (GAAP) | 1,240 | (330 | ) | 3,953 | 3,537 | ||||||||||
Reorganization and other costs | 419 | 600 | 3,966 | 1,055 | |||||||||||
Acquisition-related (benefit), net | — | — | (409 | ) | (501 | ) | |||||||||
Income before special items (non-GAAP) | 1,659 | 270 | 7,510 | 4,091 | |||||||||||
Products and Systems: | |||||||||||||||
Income (loss) from operations (GAAP) | 336 | (77 | ) | 2,368 | (16,991 | ) | |||||||||
Impairment charges | — | — | — | 15,810 | |||||||||||
Gain on sale of subsidiary | — | — | (2,384 | ) | — | ||||||||||
Reorganization and other costs | — | 18 | 29 | 18 | |||||||||||
Income (loss) before special items (non-GAAP) | 336 | (59 | ) | 13 | (1,163 | ) | |||||||||
Corporate and Eliminations: | |||||||||||||||
Loss from operations (GAAP) | (9,308 | ) | (8,776 | ) | (31,226 | ) | (29,063 | ) | |||||||
Litigation charges | — | 400 | — | 1,600 | |||||||||||
Reorganization and other costs | — | 184 | 305 | 184 | |||||||||||
Acquisition-related expense, net | 290 | 631 | 365 | 591 | |||||||||||
Loss before special items (non-GAAP) | (9,018 | ) | (7,561 | ) | (30,556 | ) | (26,688 | ) | |||||||
Total Company: | |||||||||||||||
Income from operations (GAAP) | $ | 2,502 | $ | 6,283 | $ | 22,221 | $ | 4,160 | |||||||
Litigation charges | — | 400 | — | 1,600 | |||||||||||
Pension withdrawal expense | — | — | 5,886 | — | |||||||||||
Gain on sale of subsidiary | — | — | (2,384 | ) | — | ||||||||||
Impairment charges | — | — | — | 15,810 | |||||||||||
Bad debt provision for troubled customers | 650 | — | 650 | 1,200 | |||||||||||
Reorganization and other costs | 585 | 871 | 4,758 | 1,941 | |||||||||||
Acquisition-related expense, net | 1,675 | 1,071 | 532 | 482 | |||||||||||
Income before special items (non-GAAP) | $ | 5,412 | $ | 8,625 | $ | 31,663 | $ | 25,193 | |||||||
Summary Cash Flow Information
(in thousands)
For the year ended December 31, | |||||||
2018 | 2017 | ||||||
Net cash provided by (used in): | |||||||
Operating activities | $ | 41,664 | $ | 55,799 | |||
Investing activities | (155,450 | ) | (102,797 | ) | |||
Financing activities | 113,969 | 53,045 | |||||
Effect of exchange rate changes on cash | (2,180 | ) | 2,340 | ||||
Net change in cash and cash equivalents | $ | (1,997 | ) | $ | 8,387 | ||
Reconciliation of Net Cash Provided by Operating Activities (GAAP) to Free Cash Flow (non-GAAP)
(in thousands)
For the year ended December 31, | |||||||
2018 | 2017 | ||||||
GAAP: Net cash provided by operating activities | $ | 41,664 | $ | 55,799 | |||
Less: | |||||||
Purchases of property, plant and equipment | (20,584 | ) | (19,314 | ) | |||
Purchases of intangible assets | (541 | ) | (1,255 | ) | |||
Non-GAAP: Free cash flow | $ | 20,539 | $ | 35,230 | |||
Unaudited Reconciliation of
Net Income (Loss) to Adjusted EBITDA
(in thousands)
For the three months ended December 31, | For the year ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net (loss) income | $ | (1,065 | ) | $ | 869 | $ | 6,845 | $ | (2,168 | ) | |||||
Less: net (loss) income attributable to noncontrolling interests, net of taxes | (4 | ) | (15 | ) | 9 | 7 | |||||||||
Net (loss) income attributable to Mistras Group, Inc. | $ | (1,061 | ) | $ | 884 | $ | 6,836 | $ | (2,175 | ) | |||||
Interest expense | 2,370 | 1,273 | 7,950 | 4,386 | |||||||||||
Provision for income taxes | 1,197 | 4,141 | 7,426 | 1,942 | |||||||||||
Depreciation and amortization | 8,677 | 7,740 | 34,413 | 31,383 | |||||||||||
Share-based compensation expense | 1,347 | 1,436 | 6,107 | 6,575 | |||||||||||
Litigation charges | — | 400 | — | 1,600 | |||||||||||
Impairment charges | — | — | — | 15,810 | |||||||||||
Pension withdrawal expense | — | — | 5,886 | — | |||||||||||
Gain on sale of subsidiary | — | (2,384 | ) | — | |||||||||||
Acquisition-related expense, net | 1,675 | 1,071 | 532 | 482 | |||||||||||
Reorganization and other costs | 585 | 871 | 4,758 | 1,941 | |||||||||||
Bad debt provision for troubled customers | 650 | — | 650 | 1,200 | |||||||||||
Foreign exchange (gain) loss | 660 | 7 | 1,311 | 604 | |||||||||||
Adjusted EBITDA | $ | 16,100 | $ | 17,823 | $ | 73,485 | $ | 63,748 | |||||||
Unaudited Reconciliation of
Net 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)
Three months ended December 31, | Year ended December 31, | ||||||||||||||
2018 (1) | 2017 (1) | 2018 (1) | 2017 (1) | ||||||||||||
Net income (loss) (GAAP) | $ | (1,061 | ) | $ | 884 | $ | 6,836 | $ | (2,175 | ) | |||||
Impairment charges | — | — | — | 11,860 | |||||||||||
Reorganization and other costs | 496 | 617 | 3,718 | 1,331 | |||||||||||
Bad debt provision for troubled customers | 488 | — | 488 | 908 | |||||||||||
Pension withdrawal expense | — | — | 4,524 | — | |||||||||||
Gain on sale of subsidiary | — | — | (1,833 | ) | — | ||||||||||
Residual impact of tax act | 115 | 1,565 | 1,732 | (662 | ) | ||||||||||
Acquisition-related expense, net | 1,624 | 874 | 674 | 251 | |||||||||||
Litigation charges | — | 461 | — | 1,211 | |||||||||||
Net income Excluding Special Items (non-GAAP) | 1,662 | 4,401 | $ | 16,139 | $ | 12,724 | |||||||||
Diluted EPS (GAAP) | $ | (0.04 | ) | $ | 0.03 | $ | 0.23 | $ | (0.08 | ) | |||||
Impairment charges | — | — | — | 0.4 | |||||||||||
Reorganization and other costs | 0.02 | 0.02 | 0.13 | 0.04 | |||||||||||
Bad debt provision for troubled customers | 0.02 | — | 0.02 | 0.03 | |||||||||||
Pension withdrawal expense | — | — | 0.15 | — | |||||||||||
Gain on sale of subsidiary | — | — | (0.06 | ) | — | ||||||||||
Residual impact of tax act | — | 0.05 | 0.06 | (0.02 | ) | ||||||||||
Acquisition-related expense, net | 0.06 | 0.03 | 0.02 | 0.01 | |||||||||||
Litigation charges | — | 0.02 | — | 0.04 | |||||||||||
Diluted EPS Excluding Special Items (non-GAAP) | $ | 0.06 | $ | 0.15 | $ | 0.55 | $ | 0.42 | |||||||
(1) - On
Source: Mistras Group Inc