Continued Top-Line Growth and Significantly Improved Bottom-Line Annual Operating Performance
2021 Revenue Increase of 14.3% organically
2021 Operating Income of
Ongoing deleveraging, with
Highlights of the Fourth Quarter 2021*
- Revenue of
$171.2 million , an increase of 6.5% - Net cash from operating activities of
$19.8 million and free cash flow of$16.5 million - Reduction in total gross debt of
$13.3 million
Highlights of the Full Year 2021*
- Revenue of
$677.1 million , an increase of 14.3% of organic growth - Gross profit of
$197.1 million , up 10.4% with gross profit margin of 29.1% - SG&A expenses of
$161.3 million , up 2.7% due to the reversal of remaining COVID-19 temporary cost reductions inAugust 2021 - Operating income before special items of
$22.3 million - Net income of
$3.9 million - Adjusted EBITDA of
$63.0 million , up 21.4%; Adjusted EBITDA Margin of 9.3%, up 50 bps
* All comparisons are consolidated and versus the equivalent prior year period, unless otherwise noted.
Fourth quarter 2021 revenue growth of 6.5% came in at the high end of the range anticipated by the Company, after its third quarter outlook commentary. Fourth quarter 2021 gross profit was essentially flat with the year ago period, primarily due to higher benefit costs in the current year period and lower wage subsidies received than in the prior year period. Selling, general and administrative expenses in the fourth quarter of 2021 were
Full year revenue growth in 2021 of 14.3% reflects continued recovery in the Company’s primary end markets including Energy (Oil and Gas and Power Generation) and
Chief Executive Officer
** Adjusted EBITDA and free cash flow are both non-GAAP financial measurements. Information about these measurements are discussed later in the press release and attached to this press release are tables reconciling these financial measurements to comparable financial measurements determined under US GAAP.
Performance by certain segments during the fourth quarter was as follows:
Services segment fourth quarter revenues were
International segment fourth quarter revenues were
The Company generated
The Company’s net debt (total debt less cash and cash equivalents) was
Outlook for 2022
Although energy prices and demand improved during 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, where a rebound to pre-pandemic levels is lagging other end markets. More recently, with crude oil prices now significantly exceeding pre-pandemic levels, this has caused many refineries to run longer cycle times, resulting in the postponement or scaling back of planned inspections. Consequently, this may impact the spring turnaround timing, as customers that initially had heavy overlap of projects in certain regions, are either curtailing or deferring work to later in the year. Regardless, the Company believes conditions will improve throughout 2022. For the first quarter of 2022, the Company expects revenue to be a low single digit increase as compared to the first quarter of 2021. The Company expects Adjusted EBITDA to be essentially flat in the first quarter of 2022, compared to the first quarter of 2021. The first quarter of 2021 benefitted from a significant level of Canadian wages subsidies, and the temporary COVID cost reductions were fully in place through August of 2021, thus also benefiting the first quarter of 2021. Our outlook is contingent on continuing geopolitical and macroeconomic stability.
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
Unaudited Consolidated Balance Sheets
(in thousands, except share and per share data)
2021 | 2020 | ||||||
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 24,110 | $ | 25,760 | |||
Accounts receivable, net | 109,511 | 107,628 | |||||
Inventories | 12,686 | 13,134 | |||||
Prepaid expenses and other current assets | 15,031 | 16,066 | |||||
Total current assets | 161,338 | 162,588 | |||||
Property, plant and equipment, net | 86,578 | 92,681 | |||||
Intangible assets, net | 59,381 | 68,642 | |||||
205,439 | 206,008 | ||||||
Deferred income taxes | 2,174 | 2,069 | |||||
Other assets | 47,285 | 51,325 | |||||
Total Assets | $ | 562,195 | $ | 583,313 | |||
LIABILITIES AND EQUITY | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 12,870 | $ | 14,240 | |||
Accrued expenses and other current liabilities | 83,863 | 78,500 | |||||
Current portion of long-term debt | 20,162 | 10,678 | |||||
Current portion of finance lease obligations | 3,765 | 3,765 | |||||
Income taxes payable | 755 | 2,664 | |||||
Total current liabilities | 121,415 | 109,847 | |||||
Long-term debt, net of current portion | 182,403 | 209,538 | |||||
Obligations under finance leases, net of current portion | 9,752 | 11,115 | |||||
Deferred income taxes | 8,385 | 8,236 | |||||
Other long-term liabilities | 39,328 | 47,358 | |||||
Total Liabilities | $ | 361,283 | $ | 386,094 | |||
Commitments and contingencies | |||||||
Equity | |||||||
Preferred stock, 10,000,000 shares authorized | — | — | |||||
Common stock, | 295 | 292 | |||||
Additional paid-in capital | 238,687 | 234,638 | |||||
Accumulated Deficit | (17,988 | ) | (21,848 | ) | |||
Accumulated other comprehensive loss | (20,311 | ) | (16,061 | ) | |||
200,683 | 197,021 | ||||||
Non-controlling interests | 229 | 198 | |||||
Total Equity | 200,912 | 197,219 | |||||
Total Liabilities and Equity | $ | 562,195 | $ | 583,313 |
Unaudited Consolidated Statements of Income (Loss)
(in thousands, except per share data)
For the quarter ended | For the year ended | |||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||
Revenue | $ | 171,163 | $ | 160,777 | $ | 677,131 | $ | 592,571 | ||||||
Cost of revenue | 115,233 | 105,647 | 457,013 | 391,855 | ||||||||||
Depreciation | 6,336 | 5,785 | 22,971 | 22,185 | ||||||||||
Gross profit | 49,594 | 49,345 | 197,147 | 178,531 | ||||||||||
Selling, general and administrative expenses | 42,755 | 40,519 | 161,334 | 157,157 | ||||||||||
Legal settlement and litigation charges (benefit), net | 1,012 | 140 | 2,042 | (220 | ) | |||||||||
Impairment charges | — | — | — | 106,062 | ||||||||||
Research and engineering | 576 | 722 | 2,518 | 2,892 | ||||||||||
Depreciation and amortization | 2,880 | 3,161 | 11,950 | 13,520 | ||||||||||
Acquisition-related expense, net | 65 | 151 | 1,133 | 337 | ||||||||||
Income (loss) from operations | 2,306 | 4,652 | 18,170 | (101,217 | ) | |||||||||
Interest expense | 2,187 | 3,545 | 10,882 | 12,955 | ||||||||||
Income (loss) before provision for income taxes | 119 | 1,107 | 7,288 | (114,172 | ) | |||||||||
Provision (benefit) for income taxes | 208 | 939 | 3,395 | (14,706 | ) | |||||||||
Net income (loss) | (89 | ) | 168 | 3,893 | (99,466 | ) | ||||||||
Less: net income (loss) attributable to noncontrolling interests, net of taxes | 5 | (13 | ) | 33 | (5 | ) | ||||||||
Net income (loss) attributable to | $ | (94 | ) | $ | 181 | $ | 3,860 | $ | (99,461 | ) | ||||
Earnings (loss) per common share | ||||||||||||||
Basic | $ | 0.00 | $ | 0.01 | $ | 0.13 | $ | (3.41 | ) | |||||
Diluted | $ | 0.00 | $ | 0.01 | $ | 0.13 | $ | (3.41 | ) | |||||
Weighted average common shares outstanding: | ||||||||||||||
Basic | 29,637 | 29,330 | 29,572 | 29,147 | ||||||||||
Diluted | 30,138 | 29,680 | 30,130 | 29,147 |
Unaudited Operating Data by Segment
(in thousands)
For the quarter ended | For the year ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Revenue | |||||||||||||||
Services | $ | 141,136 | $ | 126,893 | $ | 555,387 | $ | 476,164 | |||||||
International | 28,546 | 30,669 | 117,245 | 107,556 | |||||||||||
Products and Systems | 4,332 | 5,703 | 13,831 | 16,449 | |||||||||||
Corporate and eliminations | (2,851 | ) | (2,488 | ) | (9,332 | ) | (7,598 | ) | |||||||
$ | 171,163 | $ | 160,777 | $ | 677,131 | $ | 592,571 | ||||||||
For the quarter ended | For the year ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Gross profit | |||||||||||||||
Services | $ | 38,797 | $ | 37,304 | $ | 155,384 | $ | 141,084 | |||||||
International | 8,004 | 9,434 | 34,282 | 31,046 | |||||||||||
Products and Systems | 2,346 | 2,992 | 7,001 | 6,826 | |||||||||||
Corporate and eliminations | 447 | (385 | ) | 480 | (425 | ) | |||||||||
$ | 49,594 | $ | 49,345 | $ | 197,147 | $ | 178,531 |
Unaudited Reconciliation of
Segment and Total Company Income from Operations (GAAP) to Income from Operations before
Special Items (non-GAAP)
(in thousands)
For the quarter ended | For the year ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Services: | |||||||||||||||
Income (loss) from operations (GAAP) | $ | 9,467 | $ | 12,836 | $ | 48,458 | $ | (44,222 | ) | ||||||
Impairment charges | — | — | — | 86,200 | |||||||||||
Reorganization and other costs | 32 | 16 | 129 | 141 | |||||||||||
Legal settlement and litigation charges, net | — | 441 | 1,650 | 81 | |||||||||||
Acquisition-related expense, net | 94 | 151 | 1,128 | 337 | |||||||||||
Income before special items (unaudited, non-GAAP) | $ | 9,593 | $ | 13,444 | $ | 51,365 | $ | 42,537 | |||||||
International: | |||||||||||||||
Income (loss) from operations (GAAP) | $ | (319 | ) | $ | 567 | $ | 1,839 | $ | (21,855 | ) | |||||
Impairment charges | — | — | — | 19,862 | |||||||||||
Reorganization and other costs | 300 | 977 | 424 | 1,290 | |||||||||||
Legal settlement and litigation charges, net | 737 | — | 737 | — | |||||||||||
Bad debt provision for troubled customers, net of recoveries | — | — | — | — | |||||||||||
Income (loss) before special items (unaudited, non-GAAP) | $ | 718 | $ | 1,544 | $ | 3,000 | $ | (703 | ) | ||||||
Products and Systems: | |||||||||||||||
Income (loss) from operations (GAAP) | $ | 536 | $ | 1,000 | $ | (117 | ) | $ | (936 | ) | |||||
Reorganization and other costs | — | — | 27 | 5 | |||||||||||
Income (loss) before special items (unaudited, non-GAAP) | $ | 536 | $ | 1,000 | $ | (90 | ) | $ | (931 | ) | |||||
Corporate and Eliminations: | |||||||||||||||
Loss from operations (GAAP) | $ | (7,378 | ) | $ | (9,751 | ) | $ | (32,010 | ) | $ | (34,204 | ) | |||
Legal settlement and litigation charges (benefit), net | 275 | (301 | ) | (345 | ) | (301 | ) | ||||||||
Loss on debt modification | — | — | 278 | 645 | |||||||||||
Reorganization and other costs | 93 | 40 | 93 | 177 | |||||||||||
Acquisition-related expense, net | (29 | ) | — | 5 | — | ||||||||||
Loss before special items (unaudited, non-GAAP) | $ | (7,039 | ) | $ | (10,012 | ) | $ | (31,979 | ) | $ | (33,683 | ) | |||
Income (loss) from operations (GAAP) | $ | 2,306 | $ | 4,652 | $ | 18,170 | $ | (101,217 | ) | ||||||
Impairment charges | — | — | — | 106,062 | |||||||||||
Reorganization and other costs | 425 | 1,033 | 673 | 1,613 | |||||||||||
Legal settlement and litigation charges (benefit), net | 1,012 | 140 | 2,042 | (220 | ) | ||||||||||
Loss on debt modification | — | — | 278 | 645 | |||||||||||
Acquisition-related expense, net | 65 | 151 | 1,133 | 337 | |||||||||||
Income before special items (unaudited, non-GAAP) | $ | 3,808 | $ | 5,976 | $ | 22,296 | $ | 7,220 |
Unaudited Summary Cash Flow Information
(in thousands)
For the quarter ended | For the year ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Net cash provided by (used in): | |||||||||||||||
Operating activities | $ | 19,792 | $ | 26,011 | $ | 42,261 | $ | 67,802 | |||||||
Investing activities | (3,057 | ) | (4,411 | ) | (18,551 | ) | (14,969 | ) | |||||||
Financing activities | (14,379 | ) | (19,092 | ) | (23,245 | ) | (44,169 | ) | |||||||
Effect of exchange rate changes on cash | (843 | ) | 1,136 | (2,115 | ) | 2,080 | |||||||||
Net change in cash and cash equivalents | $ | 1,513 | $ | 3,644 | $ | (1,650 | ) | $ | 10,744 |
Unaudited Reconciliation of
Net Cash Provided by Operating Activities (GAAP) to Free Cash Flow (non-GAAP)
(in thousands)
For the quarter ended | For the year ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Net cash provided by operating activities (GAAP) | $ | 19,792 | $ | 26,011 | $ | 42,261 | $ | 67,802 | |||||||
Less: | |||||||||||||||
Purchases of property, plant and equipment | (3,031 | ) | (4,720 | ) | (18,161 | ) | (15,396 | ) | |||||||
Purchases of intangible assets | (228 | ) | (65 | ) | (1,115 | ) | (376 | ) | |||||||
Free cash flow (non-GAAP) | $ | 16,533 | $ | 21,226 | $ | 22,985 | $ | 52,030 |
Unaudited Reconciliation of
Gross Debt (GAAP) to Net Debt (non-GAAP)
(in thousands)
For the year ended | |||||||
2021 | 2020 | ||||||
Current portion of long-term debt | $ | 20,162 | $ | 10,678 | |||
Long-term debt, net of current portion | 182,403 | 209,538 | |||||
Total Gross Debt (GAAP) | 202,565 | 220,216 | |||||
Less: Cash and cash equivalents | (24,110 | ) | (25,760 | ) | |||
Total Net Debt (non-GAAP) | $ | 178,455 | $ | 194,456 |
Unaudited Reconciliation of
Net Income (Loss) (GAAP) to Adjusted EBITDA (non-GAAP)
(in thousands)
For the quarter ended | For the year ended | |||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||
Net income (loss) | $ | (89 | ) | $ | 168 | $ | 3,893 | $ | (99,466 | ) | ||||
Less: Net income (loss) attributable to noncontrolling interests, net of taxes | 5 | (13 | ) | 33 | (5 | ) | ||||||||
Net income (loss) attributable to | $ | (94 | ) | $ | 181 | $ | 3,860 | $ | (99,461 | ) | ||||
Interest expense | 2,187 | 3,545 | 10,882 | 12,955 | ||||||||||
Provision (benefit) for income taxes | 208 | 939 | 3,395 | (14,706 | ) | |||||||||
Depreciation and amortization | 9,216 | 8,946 | 34,921 | 35,705 | ||||||||||
Share-based compensation expense | 1,505 | 1,539 | 5,421 | 5,851 | ||||||||||
Legal settlement and litigation charges (benefit), net | 1,012 | 140 | 2,042 | (220 | ) | |||||||||
Loss on debt modification | — | — | 278 | 645 | ||||||||||
Impairment charges | — | — | — | 106,062 | ||||||||||
Acquisition-related expense, net | 65 | 151 | 1,133 | 337 | ||||||||||
Reorganization and other costs | 425 | 1,033 | 673 | 1,613 | ||||||||||
Foreign exchange loss | 27 | 1,135 | 371 | 3,100 | ||||||||||
Adjusted EBITDA | $ | 14,551 | $ | 17,609 | $ | 62,976 | $ | 51,881 |
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)
For the quarter ended | For the year ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Net income (loss) attributable to | $ | (94 | ) | $ | 181 | $ | 3,860 | $ | (99,461 | ) | |||||
Special items | 1,502 | 1,324 | 4,126 | 108,437 | |||||||||||
Tax impact on special items | (301 | ) | (242 | ) | (917 | ) | (14,475 | ) | |||||||
Special items, net of tax | $ | 1,201 | $ | 1,082 | $ | 3,209 | $ | 93,962 | |||||||
Net income (loss) attributable to | $ | 1,107 | $ | 1,263 | $ | 7,069 | $ | (5,499 | ) | ||||||
Diluted EPS (GAAP) | $ | 0.00 | $ | 0.01 | $ | 0.13 | $ | (3.41 | ) | ||||||
Special items, net of tax | 0.04 | 0.04 | 0.10 | 3.22 | |||||||||||
Diluted EPS Excluding Special Items (non-GAAP) | $ | 0.04 | $ | 0.05 | $ | 0.23 | $ | (0.19 | ) |
Source: MISTRAS Group, Inc.