Revenue increase of 3.9% as reported; up 5.5% in constant currency
Continued Gross Margin improvement - Gross Profit Margin increase of 270 basis points
Significantly improved Cash provided by Operating Activities and Free Cash Flow
Highlights of the First Quarter 2023*
- Revenue of
$168.0 million , up 3.9% as reported, a 5.5% increase excluding the impact of unfavorable foreign currency exchange** - Gross profit of
$46.1 million , up 15.5%, with gross profit margin of 27.4%, a 270 basis points improvement - Net loss decreased to
$5.0 million , with Adjusted EBITDA up 88.1% to$10.4 million - Operating cash flow of
$4.4 million - Leverage ratio reduced to 3.25 times
* All comparisons are consolidated and versus the equivalent prior year period, unless otherwise noted.
** Foreign currency exchange impact is calculated by converting current period financial results in local currency, using the prior period exchange rates, and comparing this amount to the current period financial results in local currency using the current period exchange rate.
First quarter 2023 consolidated revenue was
Chief Executive Officer
Performance by certain segments during the first quarter was as follows:
During the first quarter of 2023, the Company renamed the Services segment as “North America” to closely align with the geographical area in which the Segment primarily operates. This has no change on the Company’s reportable operating segments.
International segment first quarter revenue was
Consolidated Results
The Company generated a net loss of
Cash Flow and Balance Sheet
The Company’s net cash provided by operating activities was
The Company’s gross debt was
Reorganization and Other
During the quarter, the Company recorded
Outlook
The Company reaffirms the 2023 full year guidance previously provided, that being:
- Revenue between
$710 and$740 million , - Adjusted EBITDA between
$70 and$75 million , - Free cash flow between
$30 and$33 million .
Conference Call
In connection with this release, MISTRAS will hold a conference call on
To listen to the live webcast of the conference call, visit the Investor Relations section of MISTRAS Group’s website at www.mistrasgroup.com
Note there is a new process to participate in the live question and answer session. Individuals wishing to participate may preregister at: https://register.vevent.com/register/BIa51a871e529349a8b0cdbc645b2234f6
Upon registering, a dial-in number and unique PIN will be provided to join the conference call. Following the conference call, an archived webcast of the event will be available for one year by visiting the Investor Relations section of MISTRAS Group’s website.
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 2022 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 Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
ASSETS | (unaudited) | ||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 16,717 | $ | 20,488 | |||
Accounts receivable, net | 120,425 | 123,657 | |||||
Inventories | 14,763 | 13,556 | |||||
Prepaid expenses and other current assets | 14,008 | 10,181 | |||||
Total current assets | 165,913 | 167,882 | |||||
Property, plant and equipment, net | 78,816 | 77,561 | |||||
Intangible assets, net | 47,360 | 49,015 | |||||
199,956 | 199,635 | ||||||
Deferred income taxes | 326 | 779 | |||||
Other assets | 38,448 | 40,032 | |||||
Total assets | $ | 530,819 | $ | 534,904 | |||
LIABILITIES AND EQUITY | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 13,640 | $ | 12,532 | |||
Accrued expenses and other current liabilities | 77,127 | 77,844 | |||||
Current portion of long-term debt | 7,372 | 7,425 | |||||
Current portion of finance lease obligations | 4,752 | 4,201 | |||||
Income taxes payable | 333 | 1,726 | |||||
Total current liabilities | 103,224 | 103,728 | |||||
Long-term debt, net of current portion | 181,972 | 183,826 | |||||
Obligations under finance leases, net of current portion | 11,170 | 10,045 | |||||
Deferred income taxes | 7,874 | 6,283 | |||||
Other long-term liabilities | 30,431 | 32,273 | |||||
Total liabilities | 334,671 | 336,155 | |||||
Commitments and contingencies | |||||||
Equity | |||||||
Preferred stock, 10,000,000 shares authorized | — | — | |||||
Common stock, | 302 | 298 | |||||
Additional paid-in capital | 244,131 | 243,031 | |||||
Accumulated deficit | (16,475 | ) | (11,489 | ) | |||
Accumulated other comprehensive loss | (32,117 | ) | (33,390 | ) | |||
195,841 | 198,450 | ||||||
Noncontrolling interests | 307 | 299 | |||||
Total equity | 196,148 | 198,749 | |||||
Total liabilities and equity | $ | 530,819 | $ | 534,904 | |||
Unaudited Condensed Consolidated Statements of Loss
(in thousands, except per share data)
Three months ended | |||||||
2023 | 2022 | ||||||
Revenue | $ | 168,016 | $ | 161,662 | |||
Cost of revenue | 116,051 | 115,758 | |||||
Depreciation | 5,888 | 6,012 | |||||
Gross profit | 46,077 | 39,892 | |||||
Selling, general and administrative expenses | 42,823 | 41,922 | |||||
Reorganization and other costs | 2,076 | 114 | |||||
Legal settlement and insurance recoveries, net | — | (841 | ) | ||||
Research and engineering | 480 | 551 | |||||
Depreciation and amortization | 2,525 | 2,795 | |||||
Acquisition-related expense, net | 3 | 49 | |||||
Loss from operations | (1,830 | ) | (4,698 | ) | |||
Interest expense | 4,068 | 1,938 | |||||
Loss before benefit for income taxes | (5,898 | ) | (6,636 | ) | |||
Benefit for income taxes | (920 | ) | (1,283 | ) | |||
Net Loss | (4,978 | ) | (5,353 | ) | |||
Less: net income attributable to noncontrolling interests, net of taxes | 8 | 10 | |||||
Net Loss attributable to | $ | (4,986 | ) | $ | (5,363 | ) | |
Loss per common share: | |||||||
Basic | $ | (0.17 | ) | $ | (0.18 | ) | |
Diluted | $ | (0.17 | ) | $ | (0.18 | ) | |
Weighted-average common shares outstanding: | |||||||
Basic | 30,021 | 29,634 | |||||
Diluted | 30,021 | 29,634 | |||||
Unaudited Operating Data by Segment
(in thousands)
Three months ended | |||||||
2023 | 2022 | ||||||
Revenues | |||||||
$ | 136,932 | $ | 132,946 | ||||
International | 29,407 | 28,138 | |||||
Products and Systems | 3,739 | 2,936 | |||||
Corporate and eliminations | (2,062 | ) | (2,358 | ) | |||
$ | 168,016 | $ | 161,662 | ||||
Three months ended | |||||||
2023 | 2022 | ||||||
Gross profit | |||||||
$ | 36,637 | $ | 30,526 | ||||
International | 7,367 | 8,190 | |||||
Products and Systems | 2,063 | 1,168 | |||||
Corporate and eliminations | 10 | 8 | |||||
$ | 46,077 | $ | 39,892 | ||||
Unaudited Revenues by Category
(in thousands)
Revenue by industry was as follows:
Three Months Ended | International | Products & Systems | Corp/Elim | Total | |||||||||||||||
Oil & Gas | $ | 89,773 | $ | 8,855 | $ | 37 | — | $ | 98,665 | ||||||||||
Aerospace & Defense | 13,611 | 4,980 | 11 | — | 18,602 | ||||||||||||||
Industrials | 9,302 | 6,053 | 558 | — | 15,913 | ||||||||||||||
Power generation & Transmission | 4,987 | 1,657 | 1,326 | — | 7,970 | ||||||||||||||
Other | 9,109 | 3,237 | 27 | — | 12,373 | ||||||||||||||
Infrastructure, Research & Engineering | 2,483 | 2,136 | 1,142 | — | 5,761 | ||||||||||||||
Petrochemical | 5,137 | 145 | — | — | 5,282 | ||||||||||||||
Other | 2,530 | 2,344 | 638 | (2,062 | ) | 3,450 | |||||||||||||
Total | $ | 136,932 | $ | 29,407 | $ | 3,739 | $ | (2,062 | ) | $ | 168,016 |
Three Months Ended | International | Products & Systems | 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 | ||||||||
Oil & Gas Revenue by sub-industry was as follows:
Three months ended | |||||||
2023 | 2022(1) | ||||||
($ in thousands) | |||||||
Oil and Gas Revenue | |||||||
Upstream | $ | 36,939 | $ | 32,265 | |||
Midstream | 21,231 | 24,907 | |||||
Downstream | 40,495 | 37,051 | |||||
Total | $ | 98,665 | $ | 94,223 | |||
_______________ (1)Prior year Oil and Gas composition was restated to conform with the Current year presentation, specifically | |||||||
Consolidated Revenue by type was as follows:
Three months ended | |||||||
2023 | 2022 | ||||||
($ in thousands) | |||||||
Field Services | $ | 109,680 | $ | 105,495 | |||
13,132 | 13,089 | ||||||
Data Solutions | 16,812 | 12,399 | |||||
Other | 28,392 | 30,679 | |||||
Total | $ | 168,016 | $ | 161,662 | |||
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 | |||||||
2023 | 2022 | ||||||
Income from operations (GAAP) | $ | 9,378 | $ | 3,761 | |||
Reorganization and other costs | 61 | 27 | |||||
Legal settlement and insurance recoveries, net | — | (841 | ) | ||||
Acquisition-related expense, net | — | 44 | |||||
Income from operations before special items (non-GAAP) | $ | 9,439 | $ | 2,991 | |||
International: | |||||||
Income (Loss) from operations (GAAP) | $ | (568 | ) | $ | 284 | ||
Reorganization and other costs | 107 | 87 | |||||
Income (Loss) from operations before special items (non-GAAP) | $ | (461 | ) | $ | 371 | ||
Products and Systems: | |||||||
Income (Loss) from operations (GAAP) | $ | 384 | $ | (582 | ) | ||
Income (Loss) from operations before special items (non-GAAP) | $ | 384 | $ | (582 | ) | ||
Corporate and Eliminations: | |||||||
Loss from operations (GAAP) | $ | (11,024 | ) | $ | (8,161 | ) | |
Reorganization and other costs | 1,908 | — | |||||
Acquisition-related expense, net | 3 | 5 | |||||
Loss from operations before special items (non-GAAP) | $ | (9,113 | ) | $ | (8,156 | ) | |
Loss from operations (GAAP) | $ | (1,830 | ) | $ | (4,698 | ) | |
Reorganization and other costs | 2,076 | 114 | |||||
Legal settlement and insurance recoveries, net | — | (841 | ) | ||||
Acquisition-related expense, net | 3 | 49 | |||||
Income (Loss) from operations before special items (non-GAAP) | $ | 249 | $ | (5,376 | ) | ||
Unaudited Summary Cash Flow Information
(in thousands)
Three months ended | |||||||
2023 | 2022 | ||||||
Net cash provided by (used in): | |||||||
Operating activities | $ | 4,433 | $ | (5,399 | ) | ||
Investing activities | (4,460 | ) | (2,737 | ) | |||
Financing activities | (3,951 | ) | 4,323 | ||||
Effect of exchange rate changes on cash | 207 | (376 | ) | ||||
Net change in cash and cash equivalents | $ | (3,771 | ) | $ | (4,189 | ) | |
Unaudited Reconciliation of Net Cash Provided by (Used in) Operating Activities (GAAP) to Free Cash Flow (non-GAAP)
(in thousands)
Three months ended | |||||||
2023 | 2022 | ||||||
Net cash provided by (used in) operating activities (GAAP) | $ | 4,433 | $ | (5,399 | ) | ||
Less: | |||||||
Purchases of property, plant and equipment | (4,332 | ) | (3,061 | ) | |||
Purchases of intangible assets | (361 | ) | (151 | ) | |||
Free cash flow (non-GAAP) | $ | (260 | ) | $ | (8,611 | ) | |
Unaudited Reconciliation of Gross Debt (GAAP) to Net Debt (non-GAAP)
(in thousands)
Current portion of long-term debt | $ | 7,372 | $ | 7,425 | |||
Long-term debt, net of current portion | 181,972 | 183,826 | |||||
Total Debt (Gross) | 189,344 | 191,251 | |||||
Less: Cash and cash equivalents | (16,717 | ) | (20,488 | ) | |||
Total Debt (Net) | $ | 172,627 | $ | 170,763 | |||
Unaudited Reconciliation of Net Loss (GAAP) to Adjusted EBITDA (non-GAAP)
(in thousands)
Three Months Ended | |||||||
2023 | 2022 | ||||||
Net Loss (GAAP) | $ | (4,978 | ) | $ | (5,353 | ) | |
Less: Net income attributable to non-controlling interests, net of taxes | 8 | 10 | |||||
Net Loss attributable to | $ | (4,986 | ) | $ | (5,363 | ) | |
Interest expense | 4,068 | 1,938 | |||||
Benefit for income taxes | (920 | ) | (1,283 | ) | |||
Depreciation and amortization | 8,413 | 8,807 | |||||
Share-based compensation expense | 1,542 | 1,515 | |||||
Acquisition-related expense | 3 | 49 | |||||
Reorganization and other related costs | 2,076 | 114 | |||||
Legal settlement and insurance recoveries, net | — | (841 | ) | ||||
Foreign exchange loss | 219 | 601 | |||||
Adjusted EBITDA (non-GAAP) | $ | 10,415 | $ | 5,537 | |||
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 | |||||||
2023 | 2022 | ||||||
Net loss attributable to | $ | (4,986 | ) | $ | (5,363 | ) | |
Special items | 2,079 | (678 | ) | ||||
Tax impact on special items | (504 | ) | 155 | ||||
Special items, net of tax | $ | 1,575 | $ | (523 | ) | ||
Net loss attributable to | $ | (3,411 | ) | $ | (5,886 | ) | |
Diluted EPS (GAAP)(1) | $ | (0.17 | ) | $ | (0.18 | ) | |
Special items, net of tax | 0.05 | (0.02 | ) | ||||
Diluted EPS Excluding Special Items (non-GAAP) | $ | (0.12 | ) | $ | (0.20 | ) | |
_______________ (1) For the three months ended |
Source: MISTRAS Group, Inc.