Strong Top and Bottom-line Growth resulting in Solid Cash Flow
Revenue up 42.8% to
Adjusted EBITDA increased 96.5% to
Highlights of the Second Quarter 2021*
- Revenue of
$177.7 million , up 42.8% - Gross profit of
$55.3 million , up 34.4% - Operating income of
$11.4 million - Net income of
$5.9 million , and diluted earnings per share of$0.20 - Adjusted EBITDA of
$22.6 million , up 96.5% - Operating cash flow of
$15.0 million and Free Cash Flow of$8.5 million
Highlights of the First Half 2021*
- Revenue of
$331.4 million , up 16.7% - Gross profit of
$95.3 million ; gross profit margin of 28.8% - SG&A of
$79.4 million , essentially flat despite the significant revenue increase year-over-year - Revised Credit Agreement, combined with lower outstanding debt and leverage level, significantly reduces borrowing cost prospectively
- Total debt repayment of
$8.5 million during the six months endedJune 30, 2021
* All comparisons are consolidated and versus the equivalent prior year period, unless otherwise noted.
For the second quarter of 2021, consolidated revenue was
Second quarter 2021 consolidated gross profit was up 34.4% to
Chief Executive Officer
I am also very pleased to announce the launching of MISTRAS OneSuite™ software platform, which serves as an ecosystem of integrated software and data service apps making integrity data as insight-driven, user-friendly, accessible, and actionable for the benefit of our customers. Our revised credit agreement, in combination with our lower debt and leverage level, will reduce our annual interest expense by almost
Segment Performance:
Services segment second quarter revenues were
International segment second quarter revenues were
Products and Systems revenue were
The Company generated
The Company’s total debt was
Outlook for the Third Quarter of 2021
The Company’s business has been recovering over the past four 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 significantly impact the Company’s second largest market, Aerospace. The Company expects revenue to increase in the low-to-mid teens percentage in the third quarter of 2021 over the prior year quarter. Adjusted EBITDA is expected to be higher in the third quarter of 2021 than the prior year period, but lower sequentially than the second quarter of 2021, due to substantially all of the remaining temporary cost reductions from 2020 being restored during the third quarter of 2021. This outlook is contingent on continuing macroeconomic stability, including i) continuing stabilization in crude oil markets, ii) a timely and effective COVID-19 vaccination rollout in 2021 and iii), no new or increased stay-in-place mandates resulting from an increased spread of COVID-19 variants, which would impact the Company’s ability to work as a critical service provider.
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 utilizing OneSuite™ serving as an ecosystem platform, pulling together all of MISTRAS’ software and data services capabilities, for the benefit of customers and their evolving digital requirements.
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 | $ | 19,942 | $ | 25,760 | |||
Accounts receivable, net | 122,887 | 107,628 | |||||
Inventories | 12,836 | 13,134 | |||||
Prepaid expenses and other current assets | 15,843 | 16,066 | |||||
Total current assets | 171,508 | 162,588 | |||||
Property, plant and equipment, net | 91,898 | 92,681 | |||||
Intangible assets, net | 64,608 | 68,642 | |||||
208,175 | 206,008 | ||||||
Deferred income taxes | 2,553 | 2,069 | |||||
Other assets | 48,639 | 51,325 | |||||
Total assets | $ | 587,381 | $ | 583,313 | |||
LIABILITIES AND EQUITY | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 18,015 | $ | 14,240 | |||
Accrued expenses and other current liabilities | 87,472 | 78,500 | |||||
Current portion of long-term debt | 17,835 | 10,678 | |||||
Current portion of finance lease obligations | 3,809 | 3,765 | |||||
Income taxes payable | 1,269 | 2,664 | |||||
Total current liabilities | 128,400 | 109,847 | |||||
Long-term debt, net of current portion | 193,332 | 209,538 | |||||
Obligations under finance leases, net of current portion | 10,594 | 11,115 | |||||
Deferred income taxes | 8,623 | 8,236 | |||||
Other long-term liabilities | 44,783 | 47,358 | |||||
Total liabilities | 385,732 | 386,094 | |||||
Commitments and contingencies | |||||||
Equity | |||||||
Preferred stock, 10,000,000 shares authorized | — | — | |||||
Common stock, | 294 | 292 | |||||
Additional paid-in capital | 236,125 | 234,638 | |||||
Accumulated Deficit | (21,273 | ) | (21,848 | ) | |||
Accumulated other comprehensive loss | (13,707 | ) | (16,061 | ) | |||
201,439 | 197,021 | ||||||
Noncontrolling interests | 210 | 198 | |||||
Total equity | 201,649 | 197,219 | |||||
Total liabilities and equity | $ | 587,381 | $ | 583,313 | |||
Unaudited Condensed Consolidated Statements of Income (Loss)
(in thousands, except per share data)
Three Months Ended | Six Months Ended | |||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||
Revenue | $ | 177,677 | $ | 124,435 | $ | 331,412 | $ | 283,900 | ||||||
Cost of revenue | 116,787 | 77,954 | 225,030 | 191,278 | ||||||||||
Depreciation | 5,554 | 5,323 | 11,045 | 10,820 | ||||||||||
Gross profit | 55,336 | 41,158 | 95,337 | 81,802 | ||||||||||
Selling, general and administrative expenses | 39,719 | 37,607 | 79,358 | 79,165 | ||||||||||
Impairment charges | — | — | — | 106,062 | ||||||||||
Legal settlement and litigation charges, net | — | — | 1,030 | — | ||||||||||
Research and engineering | 620 | 708 | 1,347 | 1,532 | ||||||||||
Depreciation and amortization | 3,078 | 3,207 | 6,152 | 7,177 | ||||||||||
Acquisition-related expense (benefit), net | 545 | 19 | 822 | (523 | ) | |||||||||
Income (loss) from operations | 11,374 | (383 | ) | 6,628 | (111,611 | ) | ||||||||
Interest expense | 3,155 | 2,976 | 6,368 | 5,765 | ||||||||||
Income (loss) before benefit for income taxes | 8,219 | (3,359 | ) | 260 | (117,376 | ) | ||||||||
Provision (benefit) for income taxes | 2,274 | (694 | ) | (326 | ) | (16,189 | ) | |||||||
Net Income (loss) | 5,945 | (2,665 | ) | 586 | (101,187 | ) | ||||||||
Less: net income (loss) attributable to noncontrolling interests, net of taxes | 8 | (9 | ) | 11 | (22 | ) | ||||||||
Net Income (loss) attributable to | $ | 5,937 | $ | (2,656 | ) | $ | 575 | $ | (101,165 | ) | ||||
Earnings (loss) per common share: | ||||||||||||||
Basic | $ | 0.20 | $ | (0.09 | ) | $ | 0.02 | $ | (3.49 | ) | ||||
Diluted | $ | 0.20 | $ | (0.09 | ) | $ | 0.02 | $ | (3.49 | ) | ||||
Weighted-average common shares outstanding: | ||||||||||||||
Basic | 29,602 | 29,085 | 29,514 | 29,024 | ||||||||||
Diluted | 30,136 | 29,085 | 30,039 | 29,024 | ||||||||||
Unaudited Operating Data by Segment
(in thousands)
Three Months Ended | Six Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Revenues | |||||||||||||||
Services | $ | 144,977 | $ | 100,677 | $ | 269,275 | $ | 229,550 | |||||||
International | 31,951 | 21,343 | 59,599 | 50,410 | |||||||||||
Products and Systems | 3,203 | 4,002 | 6,191 | 6,814 | |||||||||||
Corporate and eliminations | (2,454 | ) | (1,587 | ) | (3,653 | ) | (2,874 | ) | |||||||
$ | 177,677 | $ | 124,435 | $ | 331,412 | $ | 283,900 | ||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Gross profit | |||||||||||||||
Services | $ | 43,761 | $ | 33,940 | $ | 74,837 | $ | 66,177 | |||||||
International | 9,615 | 5,392 | 17,240 | 13,415 | |||||||||||
Products and Systems | 1,952 | 1,838 | 3,233 | 2,206 | |||||||||||
Corporate and eliminations | 8 | (12 | ) | 27 | 4 | ||||||||||
$ | 55,336 | $ | 41,158 | $ | 95,337 | $ | 81,802 | ||||||||
Unaudited Reconciliation of
Segment and Total Company Income from Operations (GAAP) to Income before Special Items (non-GAAP)
(in thousands)
Three Months Ended | Six Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Services: | |||||||||||||||
Income (loss) from operations (GAAP) | $ | 18,358 | $ | 10,837 | $ | 22,906 | $ | (70,657 | ) | ||||||
Impairment charges | — | — | — | 86,200 | |||||||||||
Reorganization and other costs | 26 | 45 | 97 | 67 | |||||||||||
Legal settlement and litigation charges, net | — | — | 1,650 | — | |||||||||||
Acquisition-related expense (benefit), net | 545 | 19 | 788 | (523 | ) | ||||||||||
Income before special items (non-GAAP) | $ | 18,929 | $ | 10,901 | $ | 25,441 | $ | 15,087 | |||||||
International: | |||||||||||||||
Income (loss) from operations (GAAP) | $ | 1,809 | $ | (1,937 | ) | $ | 989 | $ | (22,356 | ) | |||||
Impairment charges | — | — | — | 19,862 | |||||||||||
Reorganization and other costs | 30 | 366 | 126 | 292 | |||||||||||
Income (loss) before special items (non-GAAP) | $ | 1,839 | $ | (1,571 | ) | $ | 1,115 | $ | (2,202 | ) | |||||
Products and Systems: | |||||||||||||||
Income (loss) from operations (GAAP) | $ | 209 | $ | (96 | ) | $ | (372 | ) | $ | (1,776 | ) | ||||
Reorganization and other costs | — | — | 27 | — | |||||||||||
Income (loss) before special items (non-GAAP) | $ | 209 | $ | (96 | ) | $ | (345 | ) | $ | (1,776 | ) | ||||
Corporate and Eliminations: | |||||||||||||||
Loss from operations (GAAP) | $ | (9,002 | ) | $ | (9,187 | ) | $ | (16,895 | ) | $ | (16,822 | ) | |||
Loss on debt modification | 277 | 645 | 277 | 645 | |||||||||||
Legal settlement and litigation charges, net | — | — | (620 | ) | $ | — | |||||||||
Reorganization and other costs | — | 86 | — | 123 | |||||||||||
Acquisition-related expense, net | — | — | 34 | — | |||||||||||
Loss before special items (non-GAAP) | $ | (8,725 | ) | $ | (8,456 | ) | $ | (17,204 | ) | $ | (16,054 | ) | |||
Income (loss) from operations (GAAP) | $ | 11,374 | $ | (383 | ) | $ | 6,628 | $ | (111,611 | ) | |||||
Impairment charges | — | — | — | 106,062 | |||||||||||
Reorganization and other costs | 56 | 497 | 250 | 482 | |||||||||||
Loss on debt modification | 277 | 645 | 277 | 645 | |||||||||||
Legal settlement and litigation charges, net | — | — | 1,030 | — | |||||||||||
Acquisition-related expense (benefit), net | 545 | 19 | 822 | (523 | ) | ||||||||||
Income (loss) before special items (non-GAAP) | $ | 12,252 | $ | 778 | $ | 9,007 | $ | (4,945 | ) | ||||||
Unaudited Summary Cash Flow Information
(in thousands)
Three Months Ended | Six Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Net cash provided by (used in): | |||||||||||||||
Operating activities | $ | 14,978 | $ | 28,755 | $ | 18,126 | $ | 34,862 | |||||||
Investing activities | (6,142 | ) | (3,044 | ) | (10,318 | ) | (7,248 | ) | |||||||
Financing activities | (13,405 | ) | (20,829 | ) | (12,970 | ) | (20,337 | ) | |||||||
Effect of exchange rate changes on cash | 334 | 679 | (656 | ) | 295 | ||||||||||
Net change in cash and cash equivalents | $ | (4,235 | ) | $ | 5,561 | $ | (5,818 | ) | $ | 7,572 | |||||
Unaudited Reconciliation of
Net Cash Provided by Operating Activities (GAAP) to Free Cash Flow (non-GAAP)
(in thousands)
Three Months Ended | Six Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Net cash provided by operating activities (GAAP) | $ | 14,978 | $ | 28,755 | $ | 18,126 | $ | 34,862 | |||||||
Less: | |||||||||||||||
Purchases of property, plant and equipment | (6,185 | ) | (3,142 | ) | (10,188 | ) | (7,443 | ) | |||||||
Purchases of intangible assets | (268 | ) | (108 | ) | (618 | ) | (195 | ) | |||||||
Free cash flow (non-GAAP) | $ | 8,525 | $ | 25,505 | $ | 7,320 | $ | 27,224 | |||||||
Unaudited Reconciliation of
Gross Debt (GAAP) to Net Debt (non-GAAP)
(in thousands)
Current portion of long-term debt | $ | 17,835 | $ | 10,678 | |||
Long-term debt, net of current portion | 193,332 | 209,538 | |||||
Total Gross Debt (GAAP) | 211,167 | 220,216 | |||||
Less: Cash and cash equivalents | (19,942 | ) | (25,760 | ) | |||
Total Net Debt (non-GAAP) | $ | 191,225 | $ | 194,456 | |||
Unaudited Reconciliation of
Net Income (Loss) (GAAP) to Adjusted EBITDA (non-GAAP)
(in thousands)
Three Months Ended | Six Months Ended | |||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||
Net Income (loss) (GAAP) | $ | 5,945 | $ | (2,665 | ) | $ | 586 | $ | (101,187 | ) | ||||
Less: Net income (loss) attributable to non-controlling interests, net of taxes | 8 | (9 | ) | 11 | (22 | ) | ||||||||
Net Income (loss) attributable to | $ | 5,937 | $ | (2,656 | ) | $ | 575 | $ | (101,165 | ) | ||||
Interest expense | 3,155 | 2,976 | 6,368 | 5,765 | ||||||||||
Provision (benefit) for income taxes | 2,274 | (694 | ) | (326 | ) | (16,189 | ) | |||||||
Depreciation and amortization | 8,632 | 8,530 | 17,197 | 17,997 | ||||||||||
Share-based compensation expense | 1,202 | 1,395 | 2,464 | 2,740 | ||||||||||
Impairment charges | — | — | — | 106,062 | ||||||||||
Acquisition-related expense (benefit), net | 545 | 19 | 822 | (523 | ) | |||||||||
Reorganization and other related costs | 56 | 497 | 250 | 482 | ||||||||||
Legal settlement and litigation charges, net | — | — | 1,030 | — | ||||||||||
Loss on debt modification | 277 | 645 | 277 | 645 | ||||||||||
Foreign exchange loss | 474 | 764 | 932 | 1,067 | ||||||||||
Adjusted EBITDA (non-GAAP) | $ | 22,552 | $ | 11,476 | $ | 29,589 | $ | 16,881 | ||||||
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 | Six Months Ended | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Net income (loss) attributable to | $ | 5,937 | $ | (2,656 | ) | $ | 575 | $ | (101,165 | ) | ||||||
Special items | 878 | 1,161 | 2,379 | 106,666 | ||||||||||||
Tax impact on special items | (189 | ) | (191 | ) | (557 | ) | (14,041 | ) | ||||||||
Special items, net of tax | $ | 689 | $ | 970 | $ | 1,822 | $ | 92,625 | ||||||||
Net income (loss) attributable to | $ | 6,626 | $ | (1,686 | ) | $ | 2,397 | $ | (8,540 | ) | ||||||
Diluted EPS (GAAP)(1) | $ | 0.20 | $ | (0.09 | ) | $ | 0.02 | $ | (3.49 | ) | ||||||
Special items, net of tax | 0.02 | 0.03 | 0.06 | 3.19 | ||||||||||||
Diluted EPS Excluding Special Items (non-GAAP) | $ | 0.22 | $ | (0.06 | ) | $ | 0.08 | $ | (0.30 | ) |
_______________
(1) For the three and six months ended
Source: MISTRAS Group, Inc.