Continuing Top-Line Growth, Lowered Cost of Capital and Expanded Data Solutions offerings
Organic revenue growth of 5.2%
Interest expense reduction of
Continued expansion of OneSuite™ (Data Solutions), Sensoria™ (Wind) and Private Space capabilities
Highlights of the First Quarter 2022*
- Revenue of
$161.7 million , an increase of 5.2% of organic growth - SG&A expenses of
$42.0 million , down 1.7% sequentially - Net loss of
$5.4 million - Adjusted EBITDA of
$5.5 million - Gross debt of
$208.8 million and Net debt of$188.9 million
* All comparisons are consolidated and versus the equivalent prior year period, unless otherwise noted.
First quarter 2022 revenue growth of 5.2% came in at the high end of the range anticipated by the Company during its fourth quarter outlook commentary. First quarter 2022 gross profit was essentially flat with the year ago period, although gross profit margin was down slightly, primarily due to higher healthcare costs and certain one-time costs in the current year, and the end of wage subsidies that had been received in the prior year period. Gross profit margin is expected to expand significantly over the remainder of the year, due to anticipated volume growth and improved sales mix. Selling, general and administrative expenses in the first quarter of 2022 were
Chief Executive Officer
The Company’s expectations for full year financial performance are discussed later in the release.
Both OneSuite and Sensoria represent an evolution in asset protection, which MISTRAS is uniquely qualified to leverage our proven capabilities and expertise such as acoustic emission monitoring, while innovating to meet the needs of the changing global landscape. These newer, data-centric capabilities favorably complement our more established MISTRAS Digital® tool - a mobile, cloud-based field inspection, execution, and reporting platform, which digitalizes the field inspection process via a powerful, end-to-end workflow solution. All of these inter-related data solutions combine together, to create a robust, predictive analytical platform, delivering an enhanced return on investment (“ROI”) for our core and emerging customers. I am very excited about our prospects for growth in these new areas of opportunity in 2022 and beyond.”
Performance by certain Segments:
Services segment first quarter revenue was
International segment first quarter revenues were
The Company generated a net loss of
Cash Flow and Balance Sheet
The Company’s net cash from operating activities was negative
The Company’s net debt (total debt less cash and cash equivalents) was
Outlook
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. Energy prices and demand have improved from that time, the Company’s end markets are rebounding to pre-pandemic levels. The Company's second largest market Aerospace and Defense, particularly the commercial sector, had been lagging other end market recoveries, although an accelerated improvement is anticipated in commercial Aerospace in the second half of 2022. Accordingly, for the full year 2022, the Company expects to grow revenue to between
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 2021 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
Media Contact:
Group Vice President of Marketing
marcom@mistrasgroup.com
1 (609) 716-4000
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
ASSETS | (unaudited) | |||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 19,921 | $ | 24,110 | ||||
Accounts receivable, net | 127,085 | 109,511 | ||||||
Inventories | 12,589 | 12,686 | ||||||
Prepaid expenses and other current assets | 11,709 | 15,031 | ||||||
Total current assets | 171,304 | 161,338 | ||||||
Property, plant and equipment, net | 83,689 | 86,578 | ||||||
Intangible assets, net | 57,479 | 59,381 | ||||||
206,409 | 205,439 | |||||||
Deferred income taxes | 2,225 | 2,174 | ||||||
Other assets | 47,122 | 47,285 | ||||||
Total assets | $ | 568,228 | $ | 562,195 | ||||
LIABILITIES AND EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 12,422 | $ | 12,870 | ||||
Accrued expenses and other current liabilities | 87,466 | 83,863 | ||||||
Current portion of long-term debt | 21,336 | 20,162 | ||||||
Current portion of finance lease obligations | 3,775 | 3,765 | ||||||
Income taxes payable | 1,216 | 755 | ||||||
Total current liabilities | 126,215 | 121,415 | ||||||
Long-term debt, net of current portion | 187,478 | 182,403 | ||||||
Obligations under finance leases, net of current portion | 9,552 | 9,752 | ||||||
Deferred income taxes | 8,661 | 8,385 | ||||||
Other long-term liabilities | 39,237 | 39,328 | ||||||
Total liabilities | 371,143 | 361,283 | ||||||
Commitments and contingencies | ||||||||
Equity | ||||||||
Preferred stock, 10,000,000 shares authorized | — | — | ||||||
Common stock, | 297 | 295 | ||||||
Additional paid-in capital | 239,656 | 238,687 | ||||||
Accumulated Deficit | (23,351 | ) | (17,988 | ) | ||||
Accumulated other comprehensive loss | (19,756 | ) | (20,311 | ) | ||||
196,846 | 200,683 | |||||||
Noncontrolling interests | 239 | 229 | ||||||
Total equity | 197,085 | 200,912 | ||||||
Total liabilities and equity | $ | 568,228 | $ | 562,195 |
Unaudited Condensed Consolidated Statements of Loss
(in thousands, except per share data)
Three months ended | |||||||
2022 | 2021 | ||||||
Revenue | $ | 161,662 | $ | 153,735 | |||
Cost of revenue | 115,758 | 108,243 | |||||
Depreciation | 6,012 | 5,491 | |||||
Gross profit | 39,892 | 40,001 | |||||
Selling, general and administrative expenses | 42,036 | 39,639 | |||||
Legal settlement and insurance recoveries, net | (841 | ) | 1,030 | ||||
Research and engineering | 551 | 727 | |||||
Depreciation and amortization | 2,795 | 3,074 | |||||
Acquisition-related expense | 49 | 277 | |||||
Loss from operations | (4,698 | ) | (4,746 | ) | |||
Interest expense | 1,938 | 3,213 | |||||
Loss before benefit for income taxes | (6,636 | ) | (7,959 | ) | |||
Benefit for income taxes | (1,283 | ) | (2,600 | ) | |||
Net Loss | (5,353 | ) | (5,359 | ) | |||
Less: net income attributable to noncontrolling interests, net of taxes | 10 | 3 | |||||
Net Loss attributable to | $ | (5,363 | ) | $ | (5,362 | ) | |
Loss per common share: | |||||||
Basic | $ | (0.18 | ) | $ | (0.18 | ) | |
Diluted | $ | (0.18 | ) | $ | (0.18 | ) | |
Weighted-average common shares outstanding: | |||||||
Basic | 29,634 | 29,425 | |||||
Diluted | 29,634 | 29,425 |
Unaudited Operating Data by Segment
(in thousands)
Three months ended | |||||||
2022 | 2021 | ||||||
Revenues | |||||||
Services | $ | 132,946 | $ | 124,298 | |||
International | 28,138 | 27,648 | |||||
Products and Systems | 2,936 | 2,988 | |||||
Corporate and eliminations | (2,358 | ) | (1,199 | ) | |||
$ | 161,662 | $ | 153,735 | ||||
Three months ended | |||||||
2022 | 2021 | ||||||
Gross profit | |||||||
Services | $ | 30,526 | $ | 31,076 | |||
International | 8,190 | 7,625 | |||||
Products and Systems | 1,168 | 1,281 | |||||
Corporate and eliminations | 8 | 19 | |||||
$ | 39,892 | $ | 40,001 |
Unaudited Revenues by Category
(in thousands)
Revenue by category was as follows:
Three Months Ended | Services | International | Products | Corp/Elim | Total | |||||
Oil & Gas | 86,613 | 7,572 | 38 | — | 94,223 | |||||
Aerospace & Defense | 15,022 | 4,940 | 108 | — | 20,070 | |||||
Industrials | 9,007 | 5,528 | 502 | — | 15,037 | |||||
Power generation & Transmission | 3,822 | 2,562 | 845 | — | 7,229 | |||||
Other | 10,293 | 3,518 | 1 | — | 13,812 | |||||
Infrastructure, Research & Engineering | 2,506 | 2,039 | 897 | — | 5,442 | |||||
Petrochemical | 3,045 | 78 | — | — | 3,123 | |||||
Other | 2,638 | 1,901 | 545 | (2,358 | ) | 2,726 | ||||
Total | 132,946 | 28,138 | 2,936 | (2,358 | ) | 161,662 |
Three Months Ended | Services | International | Products | Corp/Elim | Total | |||||
Oil & Gas | 79,220 | 7,936 | 56 | — | 87,212 | |||||
Aerospace & Defense | 11,823 | 4,317 | 35 | — | 16,175 | |||||
Industrials | 8,819 | 4,849 | 327 | — | 13,995 | |||||
Power generation & Transmission | 5,534 | 1,978 | 759 | — | 8,271 | |||||
Other | 7,856 | 2,912 | 9 | — | 10,777 | |||||
Infrastructure, Research & Engineering | 3,169 | 3,756 | 1,144 | — | 8,069 | |||||
Petrochemical | 5,464 | 72 | — | 5,536 | ||||||
Other | 2,413 | 1,828 | 658 | (1,199 | ) | 3,700 | ||||
Total | 124,298 | 27,648 | 2,988 | (1,199 | ) | 153,735 |
Revenue by Oil & Gas Sub-category was as follows:
Three months ended | |||
2022 | 2021 | ||
($ in thousands) | |||
Oil and Gas Revenue | |||
Upstream | 41,665 | 33,926 | |
Midstream | 24,907 | 22,438 | |
Downstream | 27,651 | 30,848 | |
Total | 94,223 | 87,212 |
Unaudited Reconciliation of Segment and Total Company Income (Loss) from Operations (GAAP) to
Income (Loss) from Operations before Special Items (non-GAAP)
(in thousands)
Three months ended | |||||||
2022 | 2021 | ||||||
Services: | |||||||
Income from operations (GAAP) | $ | 3,761 | $ | 4,548 | |||
Reorganization and other costs | 27 | 71 | |||||
Legal settlement and insurance recoveries, net | (841 | ) | 1,650 | ||||
Acquisition-related expense, net | 44 | 243 | |||||
Income before special items (non-GAAP) | $ | 2,991 | $ | 6,512 | |||
International: | |||||||
Income (Loss) from operations (GAAP) | $ | 284 | $ | (820 | ) | ||
Reorganization and other costs | 87 | 96 | |||||
Income (Loss) from operations before special items (non-GAAP) | $ | 371 | $ | (724 | ) | ||
Products and Systems: | |||||||
Loss from operations (GAAP) | $ | (582 | ) | $ | (581 | ) | |
Reorganization and other costs | — | 27 | |||||
Loss from operations before special items (non-GAAP) | $ | (582 | ) | $ | (554 | ) | |
Corporate and Eliminations: | |||||||
Loss from operations (GAAP) | $ | (8,161 | ) | $ | (7,893 | ) | |
Legal settlement and insurance recoveries, net | — | (620 | ) | ||||
Acquisition-related expense, net | 5 | 34 | |||||
Loss from operations before special items (non-GAAP) | $ | (8,156 | ) | $ | (8,479 | ) | |
Loss from operations (GAAP) | $ | (4,698 | ) | $ | (4,746 | ) | |
Reorganization and other costs | 114 | 194 | |||||
Legal settlement and insurance recoveries, net | (841 | ) | 1,030 | ||||
Acquisition-related expense, net | 49 | 277 | |||||
Loss from operations before special items (non-GAAP) | $ | (5,376 | ) | $ | (3,245 | ) |
Unaudited Summary Cash Flow Information
(in thousands)
Three months ended | |||||||
2022 | 2021 | ||||||
Net cash provided by (used in): | |||||||
Operating activities | $ | (5,399 | ) | $ | 3,148 | ||
Investing activities | (2,737 | ) | (4,176 | ) | |||
Financing activities | 4,323 | 435 | |||||
Effect of exchange rate changes on cash | (376 | ) | (990 | ) | |||
Net change in cash and cash equivalents | $ | (4,189 | ) | $ | (1,583 | ) | |
Unaudited Reconciliation of Net Cash Provided by (Used in) Operating Activities (GAAP) to Free Cash Flow (non-GAAP)
(in thousands)
Three months ended | |||||||
2022 | 2021 | ||||||
Net cash provided by (used in) operating activities (GAAP) | $ | (5,399 | ) | $ | 3,148 | ||
Less: | |||||||
Purchases of property, plant and equipment | (3,061 | ) | (4,003 | ) | |||
Purchases of intangible assets | (151 | ) | (350 | ) | |||
Free cash flow (non-GAAP) | $ | (8,611 | ) | $ | (1,205 | ) |
Unaudited Reconciliation of Gross Debt (GAAP) to Net Debt (non-GAAP)
(in thousands)
Current portion of long-term debt | $ | 21,336 | $ | 20,162 | ||||
Long-term debt, net of current portion | 187,478 | 182,403 | ||||||
Total Debt (Gross) | 208,814 | 202,565 | ||||||
Less: Cash and cash equivalents | (19,921 | ) | (24,110 | ) | ||||
Total Net Debt | $ | 188,893 | $ | 178,455 |
Unaudited Reconciliation of Net Loss (GAAP) to Adjusted EBITDA (non-GAAP)
(in thousands)
Three Months Ended | |||||||
2022 | 2021 | ||||||
Net Loss (GAAP) | $ | (5,353 | ) | $ | (5,359 | ) | |
Less: Net income attributable to non-controlling interests, net of taxes | 10 | 3 | |||||
Net Loss attributable to | $ | (5,363 | ) | $ | (5,362 | ) | |
Interest expense | 1,938 | 3,213 | |||||
Benefit for income taxes | (1,283 | ) | (2,600 | ) | |||
Depreciation and amortization | 8,807 | 8,565 | |||||
Share-based compensation expense | 1,515 | 1,262 | |||||
Acquisition-related expense | 49 | 277 | |||||
Reorganization and other related costs | 114 | 194 | |||||
Legal settlement and insurance recoveries, net | (841 | ) | 1,030 | ||||
Foreign exchange loss | 601 | 457 | |||||
Adjusted EBITDA (non-GAAP) | $ | 5,537 | $ | 7,036 |
Unaudited Reconciliation of Net Loss (GAAP) and Diluted EPS (GAAP) to
Net 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 | |||||||
2022 | 2021 | ||||||
Net loss attributable to | $ | (5,363 | ) | $ | (5,362 | ) | |
Special items | (678 | ) | 1,501 | ||||
Tax impact on special items | 155 | (367 | ) | ||||
Special items, net of tax | $ | (523 | ) | $ | 1,134 | ||
Net loss attributable to | $ | (5,886 | ) | $ | (4,228 | ) | |
Diluted EPS (GAAP)(1) | $ | (0.18 | ) | $ | (0.18 | ) | |
Special items, net of tax | (0.02 | ) | 0.04 | ||||
Diluted EPS Excluding Special Items (non-GAAP) | $ | (0.20 | ) | $ | (0.14 | ) |
_______________
(1) For the three months ended
Source: MISTRAS Group, Inc.