Continued Recovery of Top-Line Growth and Significantly Improved Bottom-Line Performance
Revenue Increase of 18%, Operating income expands by 61% and Net Income Up 122%
Proprietary Technologies OneSuite™ Gaining Traction and Launch of Sensoria™
Highlights of the Third Quarter 2021*
- Revenue of
$174.6 million , up 18.0% - Gross profit of
$52.2 million , up 10.2% with gross profit margin of 29.9% - Operating income of
$9.2 million , up 60.8% - Net income of
$3.4 million , or$0.11 per diluted share - Adjusted EBITDA of
$18.8 million , up 8%; Adjusted EBITDA Margin of 10.8%
Highlights of the Year-to-Date 2021*
- Revenue of
$506.0 million , up 17.2% - Gross profit of
$147.6 million , up 14.2% with gross profit margin of 29.2% - SG&A expense of
$118.6 million , up 1.7% - Net income of
$4.0 million , or$0.13 per diluted share - Adjusted EBITDA of
$48.4 million , up 41%; Adjusted EBITDA Margin of 9.6%
* All comparisons are consolidated and versus the equivalent prior year period, unless otherwise noted.
Third quarter revenue growth of 18% came in at the high end of the range anticipated by the Company last quarter, in their second quarter outlook commentary. Revenue gains reflect continued recovery in the Company’s primary end markets including Energy, Aerospace and Defense,
Chief Executive Officer
For more information on these exciting new solutions from MISTRAS, please visit www.mistrasgroup.com/onesuite and www.sensoriawind.com.
Performance by segment during the third quarter was as follows:
Services segment third quarter revenues were
International segment third quarter revenues were
The Company generated
The Company’s net debt (total debt less cash and cash equivalents) was
Outlook for remainder of 2021
The Company’s business has been recovering from the low level of demand experienced in the second quarter of 2020, when the effect of COVID-19 peaked. Although energy prices and demand have improved throughout 2021, the ongoing COVID-19 pandemic continues to impact the Company. This effect is most pronounced on the Company’s second largest market Aerospace and Defense, especially in the commercial sector. Accordingly, for the fourth quarter of 2021 the Company expects revenue to be flat with the prior year quarter, primarily due to the energy markets’ immediate focus on peak uptime and a lagging commercial aerospace recovery. Adjusted EBITDA is expected to contract modestly in the fourth quarter of 2021, due to substantially all of the remaining temporary cost reductions initiated in 2020 having been fully reversed during the third quarter of 2021, and a lower level of Canadian wage subsidies in 2021 versus 2020. The Company’s outlook for the remainder of 2021 is contingent on continuing macroeconomic stability, including i) continuing stabilization in crude oil markets, ii) ongoing effectiveness of COVID-19 vaccination and booster rollout, and iii) no significant global supply chain disruptions or labor shortages, 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 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 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 | $ | 22,597 | $ | 25,760 | ||||
Accounts receivable, net | 127,699 | 107,628 | ||||||
Inventories | 12,178 | 13,134 | ||||||
Prepaid expenses and other current assets | 17,505 | 16,066 | ||||||
Total current assets | 179,979 | 162,588 | ||||||
Property, plant and equipment, net | 90,366 | 92,681 | ||||||
Intangible assets, net | 61,695 | 68,642 | ||||||
205,657 | 206,008 | |||||||
Deferred income taxes | 2,676 | 2,069 | ||||||
Other assets | 46,855 | 51,325 | ||||||
Total assets | $ | 587,228 | $ | 583,313 | ||||
LIABILITIES AND EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 13,343 | $ | 14,240 | ||||
Accrued expenses and other current liabilities | 88,312 | 78,500 | ||||||
Current portion of long-term debt | 18,988 | 10,678 | ||||||
Current portion of finance lease obligations | 3,773 | 3,765 | ||||||
Income taxes payable | 1,676 | 2,664 | ||||||
Total current liabilities | 126,092 | 109,847 | ||||||
Long-term debt, net of current portion | 196,866 | 209,538 | ||||||
Obligations under finance leases, net of current portion | 10,338 | 11,115 | ||||||
Deferred income taxes | 9,195 | 8,236 | ||||||
Other long-term liabilities | 43,711 | 47,358 | ||||||
Total liabilities | 386,202 | 386,094 | ||||||
Commitments and contingencies | ||||||||
Equity | ||||||||
Preferred stock, 10,000,000 shares authorized | — | — | ||||||
Common stock, | 294 | 292 | ||||||
Additional paid-in capital | 237,577 | 234,638 | ||||||
Accumulated Deficit | (17,893 | ) | (21,848 | ) | ||||
Accumulated other comprehensive loss | (19,176 | ) | (16,061 | ) | ||||
200,802 | 197,021 | |||||||
Noncontrolling interests | 224 | 198 | ||||||
Total equity | 201,026 | 197,219 | ||||||
Total liabilities and equity | $ | 587,228 | $ | 583,313 |
Unaudited Condensed Consolidated Statements of Income (Loss)
(in thousands, except per share data)
Three Months Ended | Nine Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Revenue | $ | 174,556 | $ | 147,894 | $ | 505,968 | $ | 431,794 | |||||||
Cost of revenue | 116,750 | 94,930 | 341,780 | 286,208 | |||||||||||
Depreciation | 5,590 | 5,580 | 16,635 | 16,400 | |||||||||||
Gross profit | 52,216 | 47,384 | 147,553 | 129,186 | |||||||||||
Selling, general and administrative expenses | 39,221 | 37,473 | 118,579 | 116,638 | |||||||||||
Impairment charges | — | — | — | 106,062 | |||||||||||
Legal settlement and litigation charges, net | — | (360 | ) | 1,030 | (360 | ) | |||||||||
Research and engineering | 595 | 638 | 1,942 | 2,170 | |||||||||||
Depreciation and amortization | 2,918 | 3,182 | 9,070 | 10,359 | |||||||||||
Acquisition-related expense, net | 246 | 709 | 1,068 | 186 | |||||||||||
Income (loss) from operations | 9,236 | 5,742 | 15,864 | (105,869 | ) | ||||||||||
Interest expense | 2,326 | 3,645 | 8,694 | 9,410 | |||||||||||
Income (loss) before benefit for income taxes | 6,910 | 2,097 | 7,170 | (115,279 | ) | ||||||||||
Provision (benefit) for income taxes | 3,513 | 544 | 3,187 | (15,645 | ) | ||||||||||
Net Income (loss) | 3,397 | 1,553 | 3,983 | (99,634 | ) | ||||||||||
Less: net income attributable to noncontrolling interests, net of taxes | 17 | 30 | 28 | 8 | |||||||||||
Net Income (loss) attributable to | $ | 3,380 | $ | 1,523 | $ | 3,955 | $ | (99,642 | ) | ||||||
Earnings (loss) per common share: | |||||||||||||||
Basic | $ | 0.11 | $ | 0.05 | $ | 0.13 | $ | (3.43 | ) | ||||||
Diluted | $ | 0.11 | $ | 0.05 | $ | 0.13 | $ | (3.43 | ) | ||||||
Weighted-average common shares outstanding: | |||||||||||||||
Basic | 29,619 | 29,177 | 29,550 | 29,086 | |||||||||||
Diluted | 30,127 | 29,311 | 30,093 | 29,086 |
Unaudited Operating Data by Segment
(in thousands)
Three Months Ended | Nine Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Revenues | |||||||||||||||
Services | $ | 144,976 | $ | 119,721 | $ | 414,251 | $ | 349,271 | |||||||
International | 29,100 | 26,477 | 88,699 | 76,887 | |||||||||||
Products and Systems | 3,308 | 3,932 | 9,499 | 10,746 | |||||||||||
Corporate and eliminations | (2,828 | ) | (2,236 | ) | (6,481 | ) | (5,110 | ) | |||||||
$ | 174,556 | $ | 147,894 | $ | 505,968 | $ | 431,794 | ||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Gross profit | |||||||||||||||
Services | $ | 41,749 | $ | 37,603 | $ | 116,587 | $ | 103,780 | |||||||
International | 9,038 | 8,197 | 26,278 | 21,612 | |||||||||||
Products and Systems | 1,422 | 1,628 | 4,655 | 3,834 | |||||||||||
Corporate and eliminations | 7 | (44 | ) | 33 | (40 | ) | |||||||||
$ | 52,216 | $ | 47,384 | $ | 147,553 | $ | 129,186 |
Unaudited Reconciliation of
Segment and Total Company Income (Loss) from Operations (GAAP) to Income before Special Items (non-GAAP)
(in thousands)
Three Months Ended | Nine Months Ended September 30, | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Services: | |||||||||||||||
Income (loss) from operations (GAAP) | $ | 16,085 | $ | 13,599 | $ | 38,991 | $ | (57,058 | ) | ||||||
Impairment charges | — | — | — | 86,200 | |||||||||||
Reorganization and other costs | — | 58 | 97 | 125 | |||||||||||
Legal settlement and litigation charges, net | — | (360 | ) | 1,650 | (360 | ) | |||||||||
Acquisition-related expense, net | 246 | 709 | 1,034 | 186 | |||||||||||
Income before special items (non-GAAP) | $ | 16,331 | $ | 14,006 | $ | 41,772 | $ | 29,093 | |||||||
International: | |||||||||||||||
Income (loss) from operations (GAAP) | $ | 1,169 | $ | (66 | ) | $ | 2,158 | $ | (22,422 | ) | |||||
Impairment charges | — | — | — | 19,862 | |||||||||||
Reorganization and other costs | (2 | ) | 21 | 124 | 313 | ||||||||||
Income (loss) before special items (non-GAAP) | $ | 1,167 | $ | (45 | ) | $ | 2,282 | $ | (2,247 | ) | |||||
Products and Systems: | |||||||||||||||
Loss from operations (GAAP) | $ | (281 | ) | $ | (160 | ) | $ | (653 | ) | $ | (1,936 | ) | |||
Reorganization and other costs | — | 5 | 27 | 5 | |||||||||||
Loss before special items (non-GAAP) | $ | (281 | ) | $ | (155 | ) | $ | (626 | ) | $ | (1,931 | ) | |||
Corporate and Eliminations: | |||||||||||||||
Loss from operations (GAAP) | $ | (7,737 | ) | $ | (7,631 | ) | $ | (24,632 | ) | $ | (24,453 | ) | |||
Loss on debt modification | — | 278 | 645 | ||||||||||||
Legal settlement and litigation charges, net | — | — | (620 | ) | — | ||||||||||
Reorganization and other costs | — | 14 | — | 137 | |||||||||||
Acquisition-related expense, net | — | — | 34 | — | |||||||||||
Loss before special items (non-GAAP) | $ | (7,737 | ) | $ | (7,617 | ) | $ | (24,940 | ) | $ | (23,671 | ) | |||
Income (loss) from operations (GAAP) | $ | 9,236 | $ | 5,742 | $ | 15,864 | $ | (105,869 | ) | ||||||
Impairment charges | — | — | — | 106,062 | |||||||||||
Reorganization and other costs | (2 | ) | 98 | 248 | 580 | ||||||||||
Loss on debt modification | — | — | 278 | 645 | |||||||||||
Legal settlement and litigation charges, net | — | (360 | ) | 1,030 | (360 | ) | |||||||||
Acquisition-related expense, net | 246 | 709 | 1,068 | 186 | |||||||||||
Income before special items (non-GAAP) | $ | 9,480 | $ | 6,189 | $ | 18,488 | $ | 1,244 |
Unaudited Summary Cash Flow Information
(in thousands)
Three Months Ended | Nine Months Ended September 30, | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Net cash provided by (used in): | |||||||||||||||
Operating activities | $ | 4,343 | $ | 6,929 | $ | 22,469 | $ | 41,791 | |||||||
Investing activities | (5,176 | ) | (3,310 | ) | (15,494 | ) | (10,558 | ) | |||||||
Financing activities | 4,104 | (4,740 | ) | (8,866 | ) | (25,077 | ) | ||||||||
Effect of exchange rate changes on cash | (616 | ) | 649 | (1,272 | ) | 944 | |||||||||
Net change in cash and cash equivalents | $ | 2,655 | $ | (472 | ) | $ | (3,163 | ) | $ | 7,100 | |||||
Unaudited Reconciliation of
Net Cash Provided by Operating Activities (GAAP) to Free Cash Flow (non-GAAP)
(in thousands)
Three Months Ended | Nine Months Ended September 30, | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Net cash provided by operating activities (GAAP) | $ | 4,343 | $ | 6,929 | $ | 22,469 | $ | 41,791 | |||||||
Less: | |||||||||||||||
Purchases of property, plant and equipment | (4,942 | ) | (3,233 | ) | (15,130 | ) | (10,676 | ) | |||||||
Purchases of intangible assets | (269 | ) | (116 | ) | (887 | ) | (311 | ) | |||||||
Free cash flow (non-GAAP) | $ | (868 | ) | $ | 3,580 | $ | 6,452 | $ | 30,804 |
Unaudited Reconciliation of
Gross Debt (GAAP) to Net Debt (non-GAAP)
(in thousands)
Current portion of long-term debt | $ | 18,988 | $ | 10,678 | ||||
Long-term debt, net of current portion | 196,866 | 209,538 | ||||||
Total Gross Debt (GAAP) | 215,854 | 220,216 | ||||||
Less: Cash and cash equivalents | (22,597 | ) | (25,760 | ) | ||||
Total Net Debt (non-GAAP) | $ | 193,257 | $ | 194,456 |
Unaudited Reconciliation of
Net Income (Loss) (GAAP) to Adjusted EBITDA (non-GAAP)
(in thousands)
Three Months Ended | Nine Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Net Income (loss) (GAAP) | $ | 3,397 | $ | 1,553 | $ | 3,983 | $ | (99,634 | ) | ||||||
Less: Net income (loss) attributable to non-controlling interests, net of taxes | 17 | 30 | 28 | 8 | |||||||||||
Net Income (loss) attributable to | $ | 3,380 | $ | 1,523 | $ | 3,955 | $ | (99,642 | ) | ||||||
Interest expense | 2,326 | 3,645 | 8,694 | 9,410 | |||||||||||
Provision (benefit) for income taxes | 3,513 | 544 | 3,187 | (15,645 | ) | ||||||||||
Depreciation and amortization | 8,508 | 8,762 | 25,705 | 26,759 | |||||||||||
Share-based compensation expense | 1,452 | 1,572 | $ | 3,916 | 4,312 | ||||||||||
Impairment charges | — | — | — | 106,062 | |||||||||||
Acquisition-related expense (benefit), net | 246 | 709 | 1,068 | 186 | |||||||||||
Reorganization and other related costs | (2 | ) | 98 | 248 | 580 | ||||||||||
Legal settlement and litigation charges, net | — | (360 | ) | 1,030 | (360 | ) | |||||||||
Loss on debt modification | — | — | 278 | 645 | |||||||||||
Foreign exchange gain (loss) | (587 | ) | 898 | 366 | 1,965 | ||||||||||
Adjusted EBITDA (non-GAAP) | $ | 18,836 | $ | 17,391 | $ | 48,447 | $ | 34,272 |
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)
(dollars in thousands, except per share data)
Three Months Ended | Nine Months Ended September 30, | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Net income (loss) attributable to | $ | 3,380 | $ | 1,523 | $ | 3,955 | $ | (99,642 | ) | ||||||
Special items | 244 | 447 | 2,624 | 107,113 | |||||||||||
Tax impact on special items | (59 | ) | (192 | ) | (616 | ) | (14,233 | ) | |||||||
Special items, net of tax | $ | 185 | $ | 255 | $ | 2,008 | $ | 92,880 | |||||||
Net income (loss) attributable to | $ | 3,565 | $ | 1,778 | $ | 5,963 | $ | (6,762 | ) | ||||||
Diluted EPS (GAAP)(1) | $ | 0.11 | $ | 0.05 | $ | 0.13 | $ | (3.43 | ) | ||||||
Special items, net of tax | 0.01 | 0.01 | 0.07 | 3.19 | |||||||||||
Diluted EPS Excluding Special Items (non-GAAP) | $ | 0.12 | $ | 0.06 | $ | 0.20 | $ | (0.24 | ) |
_______________
(1) For the nine months ended
Source: MISTRAS Group, Inc.