Revenue in Line with Outlook and on Track for Significant Improvement over remainder of Fiscal 2021
Continued Gross Margin Expansion - Gross Profit Margin up 50 basis points
Strong Expense Discipline - Selling, General and Administrative expenses decrease by 4.6%
Profitability Improves - Net loss decreased to
Highlights of the First Quarter 2021*
- Revenue of
$153.8 million , up in Energy,Other Process Industries and Infrastructure markets - Gross profit margin was maintained or improved across all three segments
- Services segment operating income of
$4.5 million ; non-GAAP of$6.5 million , an increase of 55.6%. - Operating cash flow of
$3.1 million
* All comparisons are consolidated and versus the equivalent prior year period, unless otherwise noted.
For the first quarter of 2021, consolidated revenue was
After expanding by over 100 basis points in each of the last three years, gross profit margin expansion continued into 2021. First quarter consolidated gross profit margin expanded 50 basis points to 26.0%, reflecting continuing productivity and efficiency improvements. For the first quarter of 2021, the Company reported a net loss of
Chief Executive Officer
Segment Performance:
Services segment first quarter revenues were
International segment first quarter revenues were
Products and Systems segment revenues were
The Company generated
The Company’s net debt (total debt less cash and cash equivalents) was
Outlook for 2021
The Company’s business has been recovering over the past three quarters, from the low experienced in the second quarter of 2020, when the effect of COVID-19 was most impactful to its financial results. Although energy prices and demand are currently stable, the ongoing COVID-19 pandemic continues to impact the Company’s two largest markets, Oil & Gas and Aerospace. Despite this adverse and ongoing impact, the Company expects annual revenue for 2021 to be higher than in 2020. In addition to the restoration of top line growth, the Company anticipates that its ongoing disciplined expense management will enable it to leverage this revenue growth into significantly improved bottom line performance over the remainder of 2021. The Company anticipates that its quarterly revenue will reflect year-on-year improvement commencing in the second quarter of 2021, with revenue expected to increase as much as in the low to mid-thirty percent range, over the second quarter of 2020. The Company also anticipates that Adjusted EBITDA will expand at a much greater rate in the second quarter of 2021 than it had in the first quarter of 2021, given the significantly higher level of operating leverage that would accompany the expected revenue growth.
Conference Call
In connection with this release, MISTRAS will hold a conference call on
About
Backed by an innovative, data-driven asset protection portfolio, proprietary technologies, and a decades-long legacy of industry leadership, MISTRAS leads clients in the oil and gas, aerospace and defense, power generation, civil infrastructure, and manufacturing industries towards achieving and maintaining operational excellence. By supporting these organizations that help fuel our vehicles and power our society; inspecting components that are trusted for commercial, defense, and space craft; and building real-time monitoring equipment to enable safe travel across bridges, MISTRAS helps the world at large.
MISTRAS enhances value for its clients by integrating asset protection throughout supply chains and centralizing integrity data through a suite of Industrial IoT-connected digital software and monitoring solutions. The company’s core capabilities also include non-destructive testing (“NDT”) field inspections enhanced by advanced robotics, laboratory quality control and assurance testing, sensing technologies and NDT equipment, asset and mechanical integrity engineering services, and light mechanical maintenance and access services.
For more information about how MISTRAS helps protect civilization’s critical infrastructure, visit https://www.mistrasgroup.com/ or contact
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 2020 Annual Report on Form 10-K dated
Use of Non-GAAP Measures
In addition to financial information prepared in accordance with generally accepted accounting principles in the
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
ASSETS | (unaudited) | |||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 24,177 | $ | 25,760 | ||||
Accounts receivable, net | 111,960 | 107,628 | ||||||
Inventories | 13,148 | 13,134 | ||||||
Prepaid expenses and other current assets | 20,684 | 16,066 | ||||||
Total current assets | 169,969 | 162,588 | ||||||
Property, plant and equipment, net | 90,238 | 92,681 | ||||||
Intangible assets, net | 66,222 | 68,642 | ||||||
206,660 | 206,008 | |||||||
Deferred income taxes | 2,064 | 2,069 | ||||||
Other assets | 49,248 | 51,325 | ||||||
Total assets | $ | 584,401 | $ | 583,313 | ||||
LIABILITIES AND EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 15,052 | $ | 14,240 | ||||
Accrued expenses and other current liabilities | 83,629 | 78,500 | ||||||
Current portion of long-term debt | 11,145 | 10,678 | ||||||
Current portion of finance lease obligations | 3,729 | 3,765 | ||||||
Income taxes payable | 2,457 | 2,664 | ||||||
Total current liabilities | 116,012 | 109,847 | ||||||
Long-term debt, net of current portion | 211,161 | 209,538 | ||||||
Obligations under finance leases, net of current portion | 10,635 | 11,115 | ||||||
Deferred income taxes | 9,092 | 8,236 | ||||||
Other long-term liabilities | 45,457 | 47,358 | ||||||
Total liabilities | 392,357 | 386,094 | ||||||
Commitments and contingencies | ||||||||
Equity | ||||||||
Preferred stock, 10,000,000 shares authorized | — | — | ||||||
Common stock, | 293 | 292 | ||||||
Additional paid-in capital | 235,413 | 234,638 | ||||||
Retained earnings (deficit) | (27,210 | ) | (21,848 | ) | ||||
Accumulated other comprehensive loss | (16,653 | ) | (16,061 | ) | ||||
191,843 | 197,021 | |||||||
Noncontrolling interests | 201 | 198 | ||||||
Total equity | 192,044 | 197,219 | ||||||
Total liabilities and equity | $ | 584,401 | $ | 583,313 | ||||
Unaudited Condensed Consolidated Statements of Income (Loss)
(in thousands, except per share data)
Three months ended | |||||||
2021 | 2020 | ||||||
Revenue | $ | 153,735 | $ | 159,465 | |||
Cost of revenue | 108,243 | 113,324 | |||||
Depreciation | 5,491 | 5,497 | |||||
Gross profit | 40,001 | 40,644 | |||||
Selling, general and administrative expenses | 39,639 | 41,558 | |||||
Impairment charges | — | 106,062 | |||||
Legal settlement and litigation charges, net | 1,030 | — | |||||
Research and engineering | 727 | 824 | |||||
Depreciation and amortization | 3,074 | 3,970 | |||||
Acquisition-related expense (benefit), net | 277 | (542 | ) | ||||
Loss from operations | (4,746 | ) | (111,228 | ) | |||
Interest expense | 3,213 | 2,789 | |||||
Loss before benefit for income taxes | (7,959 | ) | (114,017 | ) | |||
Benefit for income taxes | (2,600 | ) | (15,495 | ) | |||
Net Loss | (5,359 | ) | (98,522 | ) | |||
Less: net income (loss) attributable to noncontrolling interests, net of taxes | 3 | (13 | ) | ||||
Net loss attributable to | $ | (5,362 | ) | $ | (98,509 | ) | |
Earnings (loss) per common share: | |||||||
Basic | $ | (0.18 | ) | $ | (3.40 | ) | |
Diluted | $ | (0.18 | ) | $ | (3.40 | ) | |
Weighted-average common shares outstanding: | |||||||
Basic | 29,425 | 28,963 | |||||
Diluted | 29,425 | 28,963 | |||||
Unaudited Operating Data by Segment
(in thousands)
Three months ended | |||||||
2021 | 2020 | ||||||
Revenues | |||||||
Services | $ | 124,298 | $ | 128,873 | |||
International | 27,648 | 29,067 | |||||
Products and Systems | 2,988 | 2,812 | |||||
Corporate and eliminations | (1,199 | ) | (1,287 | ) | |||
$ | 153,735 | $ | 159,465 | ||||
Three months ended | |||||||
2021 | 2020 | ||||||
Gross profit | |||||||
Services | $ | 31,076 | $ | 32,237 | |||
International | 7,625 | 8,023 | |||||
Products and Systems | 1,281 | 368 | |||||
Corporate and eliminations | 19 | 16 | |||||
$ | 40,001 | $ | 40,644 | ||||
Unaudited Reconciliation of
Segment and Total Company Income from Operations (GAAP) to Income before Special Items (non-GAAP)
(in thousands)
Three months ended | |||||||
2021 | 2020 | ||||||
Services: | |||||||
Income (loss) from operations (GAAP) | $ | 4,548 | $ | (81,494 | ) | ||
Impairment charges | — | 86,200 | |||||
Reorganization and other costs | 71 | 22 | |||||
Legal settlement and litigation charges, net | 1,650 | — | |||||
Acquisition-related expense (benefit), net | 243 | (542 | ) | ||||
Income before special items (non-GAAP) | $ | 6,512 | $ | 4,186 | |||
International: | |||||||
Loss from operations (GAAP) | $ | (820 | ) | $ | (20,419 | ) | |
Impairment charges | — | 19,862 | |||||
Reorganization and other costs | 96 | (75 | ) | ||||
Loss before special items (non-GAAP) | $ | (724 | ) | $ | (632 | ) | |
Products and Systems: | |||||||
Loss from operations (GAAP) | $ | (581 | ) | $ | (1,680 | ) | |
Reorganization and other costs | 27 | — | |||||
Loss before special items (non-GAAP) | $ | (554 | ) | $ | (1,680 | ) | |
Corporate and Eliminations: | |||||||
Loss from operations (GAAP) | $ | (7,893 | ) | $ | (7,635 | ) | |
Legal settlement and litigation charges, net | (620 | ) | — | ||||
Reorganization and other costs | — | 38 | |||||
Acquisition-related expense, net | 34 | — | |||||
Loss before special items (non-GAAP) | $ | (8,479 | ) | $ | (7,597 | ) | |
Loss from operations (GAAP) | $ | (4,746 | ) | $ | (111,228 | ) | |
Impairment charges | — | 106,062 | |||||
Reorganization and other costs (benefit) | 194 | (15 | ) | ||||
Legal settlement and litigation charges, net | 1,030 | — | |||||
Acquisition-related expense (benefit), net | 277 | (542 | ) | ||||
Loss before special items (non-GAAP) | $ | (3,245 | ) | $ | (5,723 | ) | |
Unaudited Summary Cash Flow Information
(in thousands)
Three months ended | |||||||
2021 | 2020 | ||||||
Net cash provided by (used in): | |||||||
Operating activities | $ | 3,148 | $ | 6,107 | |||
Investing activities | (4,176 | ) | (4,204 | ) | |||
Financing activities | 435 | 492 | |||||
Effect of exchange rate changes on cash | (990 | ) | (384 | ) | |||
Net change in cash and cash equivalents | $ | (1,583 | ) | $ | 2,011 | ||
Unaudited Reconciliation of
Net Cash Provided by Operating Activities (GAAP) to Free Cash Flow (non-GAAP)
(in thousands)
Three months ended | |||||||
2021 | 2020 | ||||||
Net cash provided by operating activities (GAAP) | $ | 3,148 | $ | 6,107 | |||
Less: | |||||||
Purchases of property, plant and equipment | (4,003 | ) | (4,301 | ) | |||
Purchases of intangible assets | (350 | ) | (87 | ) | |||
Free cash flow (non-GAAP) | $ | (1,205 | ) | $ | 1,719 | ||
Unaudited Reconciliation of
Gross Debt (GAAP) to Net Debt (non-GAAP)
(in thousands)
Current portion of long-term debt | $ | 11,145 | $ | 10,678 | |||
Long-term debt, net of current portion | 211,161 | 209,538 | |||||
Total Debt (Gross) | 222,306 | 220,216 | |||||
Less: Cash and cash equivalents | (24,177 | ) | (25,760 | ) | |||
Total Debt (Net) | $ | 198,129 | $ | 194,456 | |||
Unaudited Reconciliation of
Net Income (Loss) (GAAP) to Adjusted EBITDA (non-GAAP)
(in thousands)
Three Months Ended | |||||||
2021 | 2020 | ||||||
Net Loss (GAAP) | $ | (5,359 | ) | $ | (98,522 | ) | |
Less: Net income (loss) attributable to non-controlling interests, net of taxes | 3 | (13 | ) | ||||
Net Loss attributable to | $ | (5,362 | ) | $ | (98,509 | ) | |
Interest expense | 3,213 | 2,789 | |||||
Provision (benefit) for income taxes | (2,600 | ) | (15,495 | ) | |||
Depreciation and amortization | 8,565 | 9,467 | |||||
Share-based compensation expense | 1,262 | 1,345 | |||||
Impairment charges | — | 106,062 | |||||
Acquisition-related expense (benefit), net | 277 | (542 | ) | ||||
Reorganization and other related costs (benefit) | 194 | (15 | ) | ||||
Legal settlement and litigation charges, net | 1,030 | — | |||||
Foreign exchange (gain) loss | 457 | 303 | |||||
Adjusted EBITDA (non-GAAP) | $ | 7,036 | $ | 5,405 | |||
Unaudited Reconciliation of
Net Income (Loss) (GAAP) and Diluted EPS (GAAP) to Net Income (Loss) Excluding Special Items (non-GAAP)
and Diluted EPS Excluding Special Items (non-GAAP)
(tabular dollars in thousands, except per share data)
Three months ended | |||||||
2021 | 2020 | ||||||
Net income (loss) attributable to | $ | (5,362 | ) | $ | (98,509 | ) | |
Special items | 1,501 | 105,505 | |||||
Tax impact on special items | (367 | ) | (13,842 | ) | |||
Special items, net of tax | $ | 1,134 | $ | 91,663 | |||
Net income (loss) attributable to | $ | (4,228 | ) | $ | (6,846 | ) | |
Diluted EPS (GAAP)(1) | $ | (0.18 | ) | $ | (3.40 | ) | |
Special items, net of tax | 0.04 | 3.16 | |||||
Diluted EPS Excluding Special Items (non-GAAP) | $ | (0.14 | ) | $ | (0.24 | ) | |
_______________
(1) For the three months ended
Source: MISTRAS Group, Inc.