Mistras Group, Inc. (MG: NYSE), a leading “one source” global
provider of technology-enabled asset protection solutions, reported
financial results for its second quarter ended June 30, 2020.
Highlights of the Second Quarter 2020*
- Revenue of $124.4 million, a decrease of 38% as
anticipated
- Cash from operations of $28.8 million, an increase of 122%
- Free cash flow of $25.5 million, an increase of 284%
- Capital expenditures of $3.3 million, a decrease of
48%
- Debt repayment of $18.8 million; net debt** of $216.8 million
and cash on-hand of $22.6 million
- Gross profit margin of 33.1%, up from 29.9%; an improvement of
320 bps
- Selling, general and administrative expenses of $37.6 million,
down 10.3%
Highlights of the First Half 2020*
- Cash from operations of $34.9 million, an increase of 65%
- Free cash flow of $27.2 million, an increase of 199%
- Capital expenditures of $7.6 million, a decrease of 36%
- Debt repayment $15.1 million
- Gross profit margin of approximately 29%, equal to that of last
year
- Selling, general and administrative expenses reduction of $4.5
million
* All comparisons are consolidated and versus the
equivalent prior year period, unless otherwise noted.** Net debt
equals Gross Debt less Cash and Cash EquivalentsThe Company’s net
loss was $2.7 million in the second quarter of 2020, compared with
net income of $7.4 million the prior year period. The Company
generated adjusted EBITDA of $11.5 million in the second quarter of
2020, compared with $24.0 million in the prior year period. The
Company generated $28.8 million of cashflow from operations and
$25.5 million of free cashflow flow in the second quarter of 2020,
compared with $12.9 million of cashflow from operations and $6.7
million of free cash flow in the prior year period.
Chief Executive Officer Dennis Bertolotti stated, “Results for
the second quarter demonstrate the value of our asset light
business model and its ability to generate strong cash flow.
Cash from operations more than doubled from a year ago, which
enabled us to have a record setting quarter of debt reduction as we
aggressively deleverage our balance sheet. As we anticipated,
second quarter revenues were down from a year ago in what we still
believe is likely to be this years’ trough quarter, primarily due
to the slowdown in inspection activity resulting from our clients’
prioritization of safety precautions precipitated by the rapid
onset of COVID-19, as well as more cautionary customer
budgeting. Although revenues were down, our gross profit
margins were at the highest quarterly level in over five years, as
numerous cost measures implemented to address current market
conditions significantly improved efficiency and
productivity. The reduction in selling, general and
administrative expenses accelerated sequentially from the first
quarter, as the cost control actions undertaken late in the first
quarter were fully realized in the second quarter.
“Year-to-date, we have worked hard to maintain our gross profit
margin at the same 29% level as in the first half of 2019, despite
the significant decrease in revenues. Robust operating cashflow
remains paramount for Mistras at $34.9 million for the first six
months of 2020, representing one of the key strengths of our
business model. Free cashflow in the second quarter alone was $25.5
million, enabling us to pay off $18.8 million of bank debt during
the second quarter. Hence, Mistras continues to maintain the
liquidity it needs to fund operations through the current market
down cycle. We remain optimistic about our plan to generate
expanding adjusted EBITDA sequentially in the second half of 2020
over the first half, and maintain positive operating cashflow in
the second half of 2020, enabling us to continue to further
decrease our total outstanding debt by year end.”
“Stabilization in the crude oil markets and the continuing
relaxation of certain stay-in-place mandates are allowing some of
our energy industry customers to start projects in the third
quarter that were delayed earlier in the year. While it is
still extremely difficult to forecast with any degree of certainty,
we still believe our markets will progressively improve in the
third and fourth quarter. We built momentum at the end of the
second quarter which has continued into the third quarter of
2020. As such, we expect a high-teen up to 20% sequential
improvement in revenues during the third quarter over the second
quarter of 2020. Our plan is to exit fiscal 2020 on a growth
trajectory heading into next year.”
“It has been proven many times, that necessity is the
driver for dramatic improvements and innovation. We believe
the current pandemic is one of those periods wherein industrial
companies look at new and innovative ways of performing their
work. Mistras believes its customers will be looking for
partners with a more sophisticated approach to assist them in
condensing their supplier lists and searching for better business
intelligence. This is our strategy, knowing that we can apply
these tenets not only into our existing customer base, but also new
customers or market segments we target in the future.”
Performance by key segments during the quarter was as
follows:
Services segment second quarter revenues were
$100.7 million, down 37.5% from the year ago quarter, consistent
with the slowdown in energy markets and timing of projects due to
COVID-19. For the second quarter, gross profit margins were 33.7%,
up from the year-ago quarter of 29.3%, an increase of approximately
440 basis points, due to a favorable mix, coupled with ongoing cost
saving initiatives and Canadian wage subsidies.
International segment second quarter revenues
were $21.3 million, down 42.5% from the year ago quarter,
consistent with the anticipated slowdown in European aerospace,
continued runoff of the European staff leasing business, timing of
projects due to COVID-19 and unfavorable FX translation.
International segment second quarter gross profit margin was 25.3%,
down from 29.8% in the year ago quarter, due to lower
utilization.
The Company’s net debt (total debt less cash and cash
equivalents) was $216.8 million at June 30, 2020, compared to
$239.7 million at December 31, 2019. Gross debt decreased by $15.3
million during the first six months of 2020, from $254.7 million at
the end of the year to $239.4 million at June 30, 2020.
The Company generated $34.9 million of cash flows from
operations in the first half of 2020, compared with $21.1 million
in the year ago period. Free cash flow was $27.2 million in
the first half of 2020, compared with $9.1 million in year ago
period. Free cash flow benefitted from a reduction in cash paid for
capital expenditures, interest expense and income taxes. Cash
on-hand was $22.6 million at June 30, 2020, an increase of $7.6
million from December 31, 2019.
The Company’s net loss was $101.2 million in the first half of
2020, compared with net income of $2.1 million the prior year
period, due primarily to the after-tax $92.1 million non-cash
impairment charges recorded during the first quarter of 2020. The
Company generated adjusted EBITDA of $16.9 million in the first six
months of 2020, compared with $36.7 million in the prior year
period.
Outlook for the Second Half of 2020The ongoing
COVID-19 pandemic continues to impact the Company’s two largest
markets, Oil & Gas and Aerospace. Nevertheless, the
Company anticipates a high-teen up to 20% sequential improvement in
revenues for the third quarter of 2020 compared to the second
quarter, but down from the year ago quarter. While it
is extremely difficult to forecast with any degree of certainty at
this time, the Company believes that consolidated revenue in the
second half of 2020 will be higher than the first half of 2020,
with a progressive improvement in adjusted EBITDA and continuing
positive free cash flow in the second half of 2020. This
outlook is contingent on continuing macroeconomic stability,
including the recent recovery in the crude oil markets and the
ongoing relaxation of certain stay-in-place mandates.
Conference CallIn connection with this release,
MISTRAS will hold a conference call on August 6, 2020 at 9:30 a.m.
(Eastern). The call will be broadcast over the Web and can be
accessed on MISTRAS' Website, www.mistrasgroup.com. Individuals in
the U.S. wishing to participate in the conference call by phone may
dial 1-844-832-7227 and use confirmation code 3195165 when
prompted. The International dial-in number is 1-224-633-1529.
Those who wish to listen to the call later can access an archived
copy of the conference call at the MISTRAS Website.
About MISTRAS Group, Inc. - One Source for Asset
Protection Solutions®
MISTRAS Group, Inc. (NYSE: MG) is a leading "one source"
multinational provider of integrated technology-enabled asset
protection solutions, helping to maximize the safety and
operational uptime for civilization’s most critical industrial and
civil assets.
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 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,
visithttps://www.mistrasgroup.com/ or contact Nestor S.
Makarigakis, Group Vice President of Marketing at
marcom@mistrasgroup.com.
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 2019 Annual Report on Form 10-K dated March 27,
2020, as updated by our reports on Form 10-Q and Form 8-K. The
forward-looking statements are made as of the date hereof, and
MISTRAS undertakes no obligation to update such statements as a
result of new information, future events or otherwise.
Use of Non-GAAP Measures
In addition to financial information prepared in accordance with
generally accepted accounting principles in the U.S. (GAAP), this
press release also contains adjusted financial measures that we
believe provide investors and management with supplemental
information relating to operating performance and trends that
facilitate comparisons between periods and with respect to
projected information. The term "Adjusted EBITDA" used in this
release is a financial measurement not calculated in accordance
with GAAP and is defined as net income attributable to MISTRAS
Group, Inc. plus: interest expense, provision for income taxes,
depreciation and amortization, share-based compensation expense and
certain acquisition related costs (including transaction due
diligence costs and adjustments to the fair value of contingent
consideration), foreign exchange (gain) loss, non-cash impairment
charges and, if applicable, certain additional special items which
are noted. A reconciliation of Adjusted EBITDA to a financial
measurement under GAAP is set forth in a table attached to this
press release. In the press release, the Company also uses the term
"non-GAAP Net Income", which is GAAP net income adjusted for
certain items management believes are unusual and non-recurring. In
the tables attached is a table reconciling "Net Income (Loss)
(GAAP)" to "Net Income Excluding Special Items (non-GAAP), which
reconciles the non-GAAP amount to a GAAP measurement. In addition,
the Company has also included in the attached tables non-GAAP
measurement” “Segment and Total Company Income (Loss) Before
Special Items”, reconciling these measurements to financial
measurements under GAAP. The Company uses the term “free cash
flow”, a non-GAAP measurement the Company defines as cash provided
by operating activities less capital expenditures (which is
classified as an investing activity). The Company also uses the
term “net debt”, a non-GAAP measurement defined as the sum of the
current and long-term portions of long-term debt, less cash and
cash equivalent.
Mistras Group, Inc. and
SubsidiariesCondensed Consolidated Balance
Sheets(in thousands, except share and per share data)
|
|
June 30, 2020 |
|
December 31, 2019 |
ASSETS |
|
(unaudited) |
|
|
Current Assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
22,588 |
|
|
|
$ |
15,016 |
|
|
Accounts receivable, net |
|
103,698 |
|
|
|
135,997 |
|
|
Inventories |
|
14,267 |
|
|
|
13,413 |
|
|
Prepaid expenses and other current assets |
|
13,045 |
|
|
|
14,729 |
|
|
Total current assets |
|
153,598 |
|
|
|
179,155 |
|
|
Property, plant and equipment,
net |
|
93,238 |
|
|
|
98,607 |
|
|
Intangible assets, net |
|
70,848 |
|
|
|
109,537 |
|
|
Goodwill |
|
199,277 |
|
|
|
282,410 |
|
|
Deferred income taxes |
|
1,781 |
|
|
|
1,786 |
|
|
Other assets |
|
48,936 |
|
|
|
48,383 |
|
|
Total assets |
|
$ |
567,678 |
|
|
|
$ |
719,878 |
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
Current Liabilities |
|
|
|
|
Accounts payable |
|
$ |
8,239 |
|
|
|
$ |
15,033 |
|
|
Accrued expenses and other current liabilities |
|
77,308 |
|
|
|
81,389 |
|
|
Current portion of long-term debt |
|
8,735 |
|
|
|
6,593 |
|
|
Current portion of capital lease obligations |
|
3,642 |
|
|
|
4,131 |
|
|
Income taxes payable |
|
2,569 |
|
|
|
2,094 |
|
|
Total current liabilities |
|
100,493 |
|
|
|
109,240 |
|
|
Long-term debt, net of current
portion |
|
230,661 |
|
|
|
248,120 |
|
|
Obligations under capital
leases, net of current portion |
|
11,964 |
|
|
|
13,043 |
|
|
Deferred income taxes |
|
6,574 |
|
|
|
21,290 |
|
|
Other long-term
liabilities |
|
41,523 |
|
|
|
42,163 |
|
|
Total liabilities |
|
391,215 |
|
|
|
433,856 |
|
|
Commitments and
contingencies |
|
|
|
|
Equity |
|
|
|
|
Preferred stock, 10,000,000 shares authorized |
|
— |
|
|
|
— |
|
|
Common stock, $0.01 par value, 200,000,000 shares authorized,
29,110,362 and 28,945,472 shares issued |
|
291 |
|
|
|
289 |
|
|
Additional paid-in capital |
|
231,724 |
|
|
|
229,205 |
|
|
Retained earnings (deficit) |
|
(23,552 |
) |
|
|
77,613 |
|
|
Accumulated other comprehensive loss |
|
(32,172 |
) |
|
|
(21,285 |
) |
|
Total Mistras Group, Inc. stockholders’ equity |
|
176,291 |
|
|
|
285,822 |
|
|
Noncontrolling interests |
|
172 |
|
|
|
200 |
|
|
Total equity |
|
176,463 |
|
|
|
286,022 |
|
|
Total liabilities and equity |
|
$ |
567,678 |
|
|
|
$ |
719,878 |
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Condensed Consolidated
Statements of Income (Loss)(in thousands, except per share
data)
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
Revenue |
$ |
124,435 |
|
|
|
$ |
200,616 |
|
|
|
$ |
283,900 |
|
|
|
$ |
377,403 |
|
Cost of revenue |
77,954 |
|
|
|
135,063 |
|
|
|
191,278 |
|
|
|
257,480 |
|
Depreciation |
5,323 |
|
|
|
5,482 |
|
|
|
10,820 |
|
|
|
10,978 |
|
Gross
profit |
41,158 |
|
|
|
60,071 |
|
|
|
81,802 |
|
|
|
108,945 |
|
Selling, general and administrative expenses |
37,607 |
|
|
|
41,923 |
|
|
|
79,165 |
|
|
|
83,686 |
|
Bad debt provision (benefit) for troubled customers, net of
recoveries |
— |
|
|
|
(2,693 |
) |
|
|
— |
|
|
|
2,798 |
|
Impairment charges |
— |
|
|
|
— |
|
|
|
106,062 |
|
|
|
— |
|
Pension withdrawal
expense |
— |
|
|
|
— |
|
|
|
— |
|
|
|
534 |
|
Research and engineering |
708 |
|
|
|
754 |
|
|
|
1,532 |
|
|
|
1,611 |
|
Depreciation and amortization |
3,207 |
|
|
|
4,119 |
|
|
|
7,177 |
|
|
|
8,291 |
|
Acquisition-related expense
(benefit), net |
19 |
|
|
|
549 |
|
|
|
(523 |
) |
|
|
1,002 |
|
Income (loss) from
operations |
(383 |
) |
|
|
15,419 |
|
|
|
(111,611 |
) |
|
|
11,023 |
|
Interest expense |
2,976 |
|
|
|
3,579 |
|
|
|
5,765 |
|
|
|
7,106 |
|
Income (loss) before provision
(benefit) for income taxes |
(3,359 |
) |
|
|
11,840 |
|
|
|
(117,376 |
) |
|
|
3,917 |
|
Provision (benefit) for income taxes |
(694 |
) |
|
|
4,397 |
|
|
|
(16,189 |
) |
|
|
1,760 |
|
Net income (loss) |
(2,665 |
) |
|
|
7,443 |
|
|
|
(101,187 |
) |
|
|
2,157 |
|
Less: Net income (loss) attributable to non-controlling interests,
net of taxes |
(9 |
) |
|
|
12 |
|
|
|
(22 |
) |
|
|
19 |
|
Net income (loss) attributable
to Mistras Group, Inc. |
$ |
(2,656 |
) |
|
|
$ |
7,431 |
|
|
|
$ |
(101,165 |
) |
|
|
$ |
2,138 |
|
|
|
|
|
|
|
|
|
Earnings (loss) per common
share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.09 |
) |
|
|
$ |
0.26 |
|
|
|
$ |
(3.49 |
) |
|
|
$ |
0.07 |
|
Diluted |
$ |
(0.09 |
) |
|
|
$ |
0.26 |
|
|
|
$ |
(3.49 |
) |
|
|
$ |
0.07 |
|
Weighted-average common shares
outstanding: |
|
|
0 |
|
|
|
|
Basic |
29,085 |
|
|
|
28,657 |
|
|
|
29,024 |
|
|
|
28,616 |
|
Diluted |
29,085 |
|
|
|
28,862 |
|
|
|
29,024 |
|
|
|
28,918 |
|
Mistras Group, Inc. and
SubsidiariesUnaudited Operating Data by
Segment(in thousands)
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues |
|
|
|
|
|
|
|
Services |
$ |
100,677 |
|
|
|
$ |
161,210 |
|
|
|
$ |
229,550 |
|
|
|
$ |
301,507 |
|
|
International |
21,343 |
|
|
|
37,090 |
|
|
|
50,410 |
|
|
|
72,252 |
|
|
Products and Systems |
4,002 |
|
|
|
4,269 |
|
|
|
6,814 |
|
|
|
7,701 |
|
|
Corporate and eliminations |
(1,587 |
) |
|
|
(1,953 |
) |
|
|
(2,874 |
) |
|
|
(4,057 |
) |
|
|
$ |
124,435 |
|
|
|
$ |
200,616 |
|
|
|
$ |
283,900 |
|
|
|
$ |
377,403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Gross
profit |
|
|
|
|
|
|
|
Services |
$ |
33,940 |
|
|
|
$ |
47,208 |
|
|
|
$ |
66,177 |
|
|
|
$ |
84,573 |
|
|
International |
5,392 |
|
|
|
11,058 |
|
|
|
13,415 |
|
|
|
21,418 |
|
|
Products and Systems |
1,838 |
|
|
|
1,825 |
|
|
|
2,206 |
|
|
|
3,064 |
|
|
Corporate and eliminations |
(12 |
) |
|
|
(20 |
) |
|
|
4 |
|
|
|
(110 |
) |
|
|
$ |
41,158 |
|
|
|
$ |
60,071 |
|
|
|
$ |
81,802 |
|
|
|
$ |
108,945 |
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Reconciliation
ofSegment and Total Company Income from Operations
(GAAP) to Income before Special Items (non-GAAP)(in
thousands)
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Services: |
|
|
|
|
|
|
|
Income (loss) from operations (GAAP) |
$ |
10,837 |
|
|
|
$ |
20,905 |
|
|
|
$ |
(70,657 |
) |
|
|
$ |
24,958 |
|
|
Bad debt provision (benefit) for troubled customers, net of
recoveries |
— |
|
|
|
(1,977 |
) |
|
|
— |
|
|
|
2,778 |
|
|
Impairment charges |
— |
|
|
|
— |
|
|
|
86,200 |
|
|
|
— |
|
|
Pension withdrawal expense |
— |
|
|
|
— |
|
|
|
— |
|
|
|
534 |
|
|
Reorganization and other costs |
45 |
|
|
|
77 |
|
|
|
67 |
|
|
|
77 |
|
|
Acquisition-related expense (benefit), net |
19 |
|
|
|
397 |
|
|
|
(522 |
) |
|
|
702 |
|
|
Income before special items (non-GAAP) |
$ |
10,901 |
|
|
|
$ |
19,402 |
|
|
|
$ |
15,088 |
|
|
|
$ |
29,049 |
|
|
International: |
|
|
|
|
|
|
|
Income (loss) from operations (GAAP) |
$ |
(1,937 |
) |
|
|
$ |
2,450 |
|
|
|
$ |
(22,356 |
) |
|
|
$ |
2,234 |
|
|
Bad debt provision (benefit) for troubled customers, net of
recoveries |
— |
|
|
|
(716 |
) |
|
|
— |
|
|
|
20 |
|
|
Impairment charges |
— |
|
|
|
— |
|
|
|
19,862 |
|
|
|
— |
|
|
Reorganization and other costs |
366 |
|
|
|
107 |
|
|
|
292 |
|
|
|
265 |
|
|
Income (loss) before special items (non-GAAP) |
$ |
(1,571 |
) |
|
|
$ |
1,841 |
|
|
|
$ |
(2,202 |
) |
|
|
$ |
2,519 |
|
|
Products and
Systems: |
|
|
|
|
|
|
|
Loss from operations (GAAP) |
$ |
(96 |
) |
|
|
$ |
(405 |
) |
|
|
$ |
(1,776 |
) |
|
|
$ |
(1,733 |
) |
|
Loss before special items (non-GAAP) |
$ |
(96 |
) |
|
|
$ |
(405 |
) |
|
|
$ |
(1,776 |
) |
|
|
$ |
(1,733 |
) |
|
Corporate and
Eliminations: |
|
|
|
|
|
|
|
Loss from operations (GAAP) |
$ |
(9,187 |
) |
|
|
$ |
(7,531 |
) |
|
|
$ |
(16,822 |
) |
|
|
$ |
(14,436 |
) |
|
Loss on debt modification |
645 |
|
|
|
— |
|
|
|
645 |
|
|
|
— |
|
|
Reorganization and other costs |
86 |
|
|
|
— |
|
|
|
123 |
|
|
|
60 |
|
|
Acquisition-related expense, net |
— |
|
|
|
152 |
|
|
|
— |
|
|
|
300 |
|
|
Loss before special items (non-GAAP) |
$ |
(8,456 |
) |
|
|
$ |
(7,379 |
) |
|
|
$ |
(16,054 |
) |
|
|
$ |
(14,076 |
) |
|
Total
Company: |
|
|
|
|
|
|
|
Income (loss) from operations (GAAP) |
$ |
(383 |
) |
|
|
$ |
15,419 |
|
|
|
$ |
(111,611 |
) |
|
|
$ |
11,023 |
|
|
Bad debt provision (benefit) for troubled customers, net of
recoveries |
— |
|
|
|
(2,693 |
) |
|
|
— |
|
|
|
2,798 |
|
|
Impairment charges |
— |
|
|
|
— |
|
|
|
106,062 |
|
|
|
— |
|
|
Pension withdrawal expense |
— |
|
|
|
— |
|
|
|
— |
|
|
|
534 |
|
|
Reorganization and other costs |
497 |
|
|
|
184 |
|
|
|
482 |
|
|
|
402 |
|
|
Loss on debt modification |
645 |
|
|
|
— |
|
|
|
645 |
|
|
|
— |
|
|
Acquisition-related expense (benefit), net |
19 |
|
|
|
549 |
|
|
|
(522 |
) |
|
|
1,002 |
|
|
Income (loss) before special items (non-GAAP) |
$ |
778 |
|
|
|
$ |
13,459 |
|
|
|
$ |
(4,944 |
) |
|
|
$ |
15,759 |
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Summary Cash Flow
Information(in thousands)
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net cash provided by (used
in): |
|
|
|
|
|
|
|
Operating activities |
$ |
28,755 |
|
|
|
$ |
12,928 |
|
|
|
$ |
34,862 |
|
|
|
$ |
21,105 |
|
|
Investing activities |
(3,044 |
) |
|
|
(6,047 |
) |
|
|
(7,248 |
) |
|
|
(11,048 |
) |
|
Financing activities |
(20,829 |
) |
|
|
(19,190 |
) |
|
|
(20,337 |
) |
|
|
(23,139 |
) |
|
Effect of exchange rate changes on cash |
679 |
|
|
|
210 |
|
|
|
295 |
|
|
|
39 |
|
|
Net change in cash and cash
equivalents |
$ |
5,561 |
|
|
|
$ |
(12,099 |
) |
|
|
$ |
7,572 |
|
|
|
$ |
(13,043 |
) |
|
|
|
|
|
|
|
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Reconciliation of
Net Cash Provided by Operating Activities (GAAP) to Free
Cash Flow (non-GAAP)(in thousands)
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net cash provided by
operating activities (GAAP) |
$ |
28,755 |
|
|
|
$ |
12,928 |
|
|
|
$ |
34,862 |
|
|
|
$ |
21,105 |
|
|
Less: |
|
|
|
|
|
|
|
Purchases of property,
plant and equipment |
(3,142 |
) |
|
|
(5,925 |
) |
|
|
(7,443 |
) |
|
|
(11,562 |
) |
|
Purchases of intangible
assets |
(108 |
) |
|
|
(353 |
) |
|
|
(195 |
) |
|
|
(441 |
) |
|
Free cash flow
(non-GAAP) |
$ |
25,505 |
|
|
|
$ |
6,650 |
|
|
|
$ |
27,224 |
|
|
|
$ |
9,102 |
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Reconciliation of
Net Income (Loss) (GAAP) to Adjusted EBITDA
(non-GAAP)(in thousands)
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
Net income (loss)
(GAAP) |
$ |
(2,665 |
) |
|
|
$ |
7,443 |
|
|
|
$ |
(101,187 |
) |
|
|
$ |
2,157 |
|
|
Less: Net income (loss) attributable to non-controlling interests,
net of taxes |
(9 |
) |
|
|
12 |
|
|
|
(22 |
) |
|
|
19 |
|
|
Net income (loss)
attributable to Mistras Group, Inc. |
$ |
(2,656 |
) |
|
|
$ |
7,431 |
|
|
|
$ |
(101,165 |
) |
|
|
$ |
2,138 |
|
|
Interest expense |
2,976 |
|
|
|
3,579 |
|
|
|
5,765 |
|
|
|
7,106 |
|
|
Provision (benefit) for income taxes |
(694 |
) |
|
|
4,397 |
|
|
|
(16,189 |
) |
|
|
1,760 |
|
|
Depreciation and amortization |
8,530 |
|
|
|
9,601 |
|
|
|
17,997 |
|
|
|
19,269 |
|
|
Share-based compensation expense |
1,395 |
|
|
|
1,511 |
|
|
|
2,740 |
|
|
|
2,867 |
|
|
Impairment charges |
— |
|
|
|
— |
|
|
|
106,062 |
|
|
|
— |
|
|
Acquisition-related expense (benefit), net |
19 |
|
|
|
549 |
|
|
|
(523 |
) |
|
|
1,002 |
|
|
Reorganization and other related costs |
497 |
|
|
|
184 |
|
|
|
482 |
|
|
|
402 |
|
|
Pension withdrawal expense |
— |
|
|
|
— |
|
|
|
— |
|
|
|
534 |
|
|
Loss on debt modification |
645 |
|
|
|
— |
|
|
|
645 |
|
|
|
— |
|
|
Bad debt provision (benefit) for troubled customers, net of
recoveries |
— |
|
|
|
(2,693 |
) |
|
|
— |
|
|
|
2,798 |
|
|
Foreign exchange (gain) loss |
764 |
|
|
|
(568 |
) |
|
|
1,067 |
|
|
|
(1,198 |
) |
|
Adjusted EBITDA
(non-GAAP) |
$ |
11,476 |
|
|
|
$ |
23,991 |
|
|
|
$ |
16,881 |
|
|
|
$ |
36,678 |
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Reconciliation
ofNet 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 June 30, |
|
Six months ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income (loss)
attributable to Mistras Group, Inc. (GAAP) |
$ |
(2,656 |
) |
|
|
$ |
7,431 |
|
|
|
$ |
(101,165 |
) |
|
|
$ |
2,138 |
|
|
Special items |
1,161 |
|
|
|
(1,960 |
) |
|
|
106,667 |
|
|
|
4,736 |
|
|
Tax impact on special items(1) |
(191 |
) |
|
|
323 |
|
|
|
(14,041 |
) |
|
|
(1,207 |
) |
|
Special items, net of tax |
$ |
970 |
|
|
|
$ |
(1,637 |
) |
|
|
$ |
92,626 |
|
|
|
$ |
3,529 |
|
|
Net income (loss)
attributable to Mistras Group, Inc. Excluding Special Items
(non-GAAP) |
$ |
(1,686 |
) |
|
|
$ |
5,794 |
|
|
|
$ |
(8,539 |
) |
|
|
$ |
5,667 |
|
|
|
|
|
|
|
|
|
|
Diluted EPS
(GAAP)(2) |
$ |
(0.09 |
) |
|
|
$ |
0.26 |
|
|
|
$ |
(3.49 |
) |
|
|
$ |
0.07 |
|
|
Special items, net of tax |
0.03 |
|
|
|
(0.06 |
) |
|
|
3.19 |
|
|
|
0.12 |
|
|
Diluted EPS Excluding
Special Items (non-GAAP) |
$ |
(0.06 |
) |
|
|
$ |
0.20 |
|
|
|
$ |
(0.30 |
) |
|
|
$ |
0.19 |
|
|
(1) The Company modified the prior year tax effect on special
items to be consistent with the current year methodology, which was
to apply the current jurisdictional tax rate to each specific
special item. The impact of this change on the three months ended
June 30, 2019 was approximately $(0.4) million and $(0.02) per
diluted share and on the six months ended June 30, 2019 was
approximately $0.5 million and $0.02 per diluted share.(2) For the
three and six months ended June 30, 2020, 118 thousand shares and
223 thousand shares related to restricted stock were excluded from
the calculation of diluted EPS due to the net loss for the
period.
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