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Mistras Group, Inc. Strong 3rd Quarter Results Demonstrate Continued Growth in Revenues and Profits

PRINCETON JUNCTION, N.J., April 4, 2012 (GLOBE NEWSWIRE) -- Mistras Group, Inc. (NYSE:MG), a leading "one source" global provider of technology-enabled asset protection solutions, today reported financial results for the fiscal 2012 third quarter ending February 29th.

Revenue for the third quarter was $104.1 million, an increase of 31% over the $79.2 million reported in the third quarter of fiscal 2011. Adjusted EBITDA*, a non-GAAP measure detailed later in this release, increased 28% to $13.4 million in the third quarter of fiscal 2012 versus $10.5 million in the third quarter of fiscal 2011. Net income for the third quarter of fiscal 2012, which includes charges for acquisition related expenses of $0.8 million and a loss on early extinguishment of debt of $0.1 million, was $3.0 million, or $0.11 per diluted share, a 24% increase compared to the third quarter of fiscal 2011. On a non-GAAP basis, net income for the third quarter of fiscal 2012 with the adjustments detailed in the attached reconciliation schedule, including those mentioned above, grew 51% to $3.7 million or $0.13 per diluted share, versus $2.4 million, or $0.09 per diluted share, in the third quarter of fiscal 2011.

Consistent with prior quarters, organic growth was a significant contributor to the revenue gain. In the third quarter of fiscal 2012, the organic growth rate was 17%, followed by acquisition growth of 15% and the balance due to foreign currency fluctuations. Also consistent with prior quarters, the revenue growth in the third quarter was achieved across a broad range of target markets.

Additional Financial Highlights for the Fiscal 2012 Third Quarter and Nine Month periods:

  • In the first nine months of fiscal 2012, revenues grew 31% to $309.8 million, and adjusted EBITDA grew 32% to $45.9 million.
  • Net income for the first nine months of fiscal 2012 was $14.2 million, or $0.50 per diluted share, a 46% increase over the first nine months of fiscal 2011. On a non-GAAP basis, net income for the first nine months of fiscal 2012, with the adjustments detailed in attached reconciliation schedule, grew 47% to $14.6 million or $0.51 per diluted share, versus $9.9 million, or $0.37 per diluted share in the prior year.
  • Operating income for the first nine months of fiscal 2012 grew 41% to $25.6 million versus $18.2 million in the prior year. Operating income margins in the first nine months of fiscal 2012 increased to 8.3% of revenues versus 7.7% in the prior year.
  • SG&A as a percent of revenues declined in both the third quarter and first nine months of fiscal 2012, declining to 19.2% of revenues in the first nine months of fiscal 2012, versus 19.9 % in the prior year.
  • Gross profit margins in the third quarter of fiscal 2012 were consistent with the same period in the prior year.

Chairman and Chief Executive Officer, Dr. Sotirios J. Vahaviolos stated that "I am pleased with the continued momentum of our business in the third quarter, where we achieved significant revenue growth across all of our market segments, and once again delivered organic revenue growth in the mid-teens." He then continued, "During the third quarter we closed several small, but strategic acquisitions in France, the U.K. and Canada that are strengthening our presence abroad and will be in alignment with our business model, capable of delivering outsourced inspection evergreen type work."

Business Outlook/Guidance for Fiscal Year 2012

The Company's outlook is for continued double digit growth in revenue and Adjusted EDITDA*. Based on the results of the first nine months of fiscal 2012, the Company is adjusting its previously issued guidance and now projects its fiscal 2012 revenues to be in the range of $415 million to $420 million and Adjusted EBITDA* to be in the range of $66 million to $68 million. Mistras does not provide specific guidance for individual quarters, but will reaffirm or update its annual guidance at least quarterly.

Earnings Conference Call

In connection with this earnings release, Mistras will hold its quarterly conference call on Thursday, April 5th at 9:00 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 call 1-866-202-4683 and use confirmation code 12752396 when prompted. The International dial-in number is 1-617-213-8846.

About Mistras Group, Inc.

Mistras offers one of the broadest "one source" services and technology-enabled asset protection solution portfolios in the industry used to evaluate the structural integrity of energy, industrial and public infrastructure. Mission critical services and solutions are delivered globally and provide customers with the ability to extend the useful life of their assets, improve productivity and profitability, comply with government safety and environmental regulations and enhance risk management operational decisions.

Mistras uniquely combines its industry leading products and technologies - 24/7 on-line monitoring of critical assets; mechanical integrity ("MI") and non-destructive testing ("NDT") services; and its proprietary world class data warehousing and analysis software - to provide comprehensive and competitive products, systems and services solutions from a single source provider.

For more information, please visit the company's website at www.mistrasgroup.com or contact Frank Joyce, Chief Financial Officer at 609-716-4103.

The MISTRAS Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6966

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. 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 Annual Report on Form 10-K for fiscal year 2011 filed with the Securities and Exchange Commission on August 12, 2011, 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

The term "Adjusted EBITDA" and the adjustments to net income and to earnings per share are financial measurements not calculated in accordance with U.S. generally accepted accounting principles. The Company believes that investors and other users of the financial statements benefit from the presentation of Adjusted EBITDA and these adjustments to net income and earnings per share because they provide additional metrics to compare the Company's operating performance on a consistent basis and measure underlying trends and results of the Company's business. Reconciliations of Adjusted EBITDA, adjusted net income and adjusted earnings per share to financial measurements under GAAP are set forth in tables attached to this press release.

Mistras Group, Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except share data)
     
  February 29, 2012 May 31, 2011
 ASSETS     
 Current Assets     
 Cash and cash equivalents   $ 7,931  $ 10,879
 Accounts receivable, net   95,257  78,031
 Inventories, net   13,173  9,830
 Deferred income taxes   1,324  1,278
 Prepaid expenses and other current assets   9,354  6,761
Total current assets  127,039  106,779
Property, plant and equipment, net  58,570  49,168
Intangible assets, net  33,559  27,304
Goodwill  80,053  64,146
Other assets  1,511  1,240
Total assets  $ 300,732  $ 248,637
     
LIABILITIES, PREFERRED STOCK AND EQUITY    
Current Liabilities    
Current portion of long-term debt  $ 5,963  $ 7,226
Current portion of capital lease obligations  6,644  5,853
Accounts payable  7,142  6,656
Accrued expenses and other current liabilities  40,332  28,028
Income taxes payable  466  2,825
Total current liabilities  60,547  50,588
Long-term debt, net of current portion  34,645  14,625
Obligations under capital leases, net of current portion  12,847  9,623
Deferred income taxes  2,425  2,863
Other long-term liabilities  5,197  3,452
Total liabilities  115,661  81,151
     
Commitments and contingencies    
Preferred stock, 10,000,000 shares authorized  --   -- 
Equity     
     
Common stock, $0.01 par value, 200,000,000 shares authorized, 27,938,173 and 27,667,122 shares issued and outstanding as of February 29, 2012 and May 31, 2011, respectively  279  277
Additional paid-in capital  185,984  180,594
Retained earnings (accumulated deficit)  204  (14,017)
Accumulated other comprehensive (loss) income  (1,675)  303
Total Mistras Group, Inc. stockholders' equity  184,792  167,157
Noncontrolling interest  279  329
Total equity  185,071  167,486
Total liabilities, preferred stock and equity  $ 300,732  $ 248,637
 
Mistras Group, Inc.
Unaudited Consolidated Statement of Operations
Three and Nine Months Ended February 29, 2012 and February 28, 2011
(in thousands, except per share data)
         
   Three months ended   Nine months ended 
  February 29, 2012 February 28, 2011 February 29, 2012 February 28, 2011
Revenues:        
Services  $ 94,253  $ 72,411  $ 281,097  $ 216,616
Products  9,865  6,802  28,688  19,844
Total revenues  104,118  79,213  309,785  236,460
Cost of revenues:        
Cost of services  66,336  50,696  194,270  147,754
Cost of products sold  4,238  2,460  12,094  7,804
Depreciation related to services  3,760  3,307  10,639  9,252
Depreciation related to products  200  153  563  467
Total cost of revenues  74,534  56,616  217,566  165,277
Gross profit  29,584  22,597  92,219  71,183
Selling, general and administrative expenses  20,806  16,005  59,565  47,099
Research and engineering  578  514  1,769  1,638
Depreciation and amortization  1,805  1,385  4,787  3,889
Acquisition-related costs  849  --   510  -- 
Legal reserve  --   --   --   351
Income from operations  5,546  4,693  25,588  18,206
Other expenses        
Interest expense  814  596  2,620  1,957
Loss on extinguishment of long-term debt  113  --   113  -- 
Income before provision for income taxes   4,619  4,097  22,855  16,249
Provision for income taxes  1,548  1,690  8,672  6,562
Net income  3,071  2,407  14,183  9,687
Net (income) loss attributable to noncontrolling interests, net of taxes  (34)  36  38  26
Net income attributable to Mistras Group, Inc.  $ 3,037  $ 2,443  $ 14,221  $ 9,713
Earnings per common share:        
Basic  $ 0.11  $ 0.09  $ 0.51  $ 0.36
Diluted  $ 0.11  $ 0.09  $ 0.50  $ 0.36
Weighted average common shares outstanding:        
Basic  27,921  26,667  27,794  26,665
Diluted  28,829  26,919  28,563  26,824
 
Mistras Group, Inc.
Unaudited Operating Data by Segment
(in thousands)
         
   Three months ended   Nine months ended 
  February 29, 2012 February 28, 2011 February 29, 2012 February 28, 2011
         
 Revenues         
 Services   $ 80,895  $ 66,708  $ 253,493  $ 198,098
 Products and Systems   9,824  5,436  26,429  15,974
 International   17,164  8,671  38,794  27,062
 Corporate and eliminations   (3,765)  (1,602)  (8,931)  (4,674)
   $ 104,118  $ 79,213  $ 309,785  $ 236,460
         
   Three months ended   Nine months ended 
  February 29, 2012 February 28, 2011 February 29, 2012 February 28, 2011
         
 Gross profit         
 Services   $ 20,640  $ 16,650  $ 68,001  $ 53,404
 Products and Systems   4,938  3,049  12,952  8,440
 International   4,586  2,935  12,263  9,466
 Corporate and eliminations   (580)  (37)  (997)  (127)
   $ 29,584  $ 22,597  $ 92,219  $ 71,183
 
 
Mistras Group, Inc.
Unaudited Reconciliation of
Net Income Attributable to Mistras Group, Inc. (GAAP) to EBITDA and Adjusted EBITDA (Non-GAAP)
(in thousands)
         
   Three months ended   Nine months ended 
  February 29, 2012 February 28, 2011 February 29, 2012 February 28, 2011
     
EBITDA and Adjusted EBITDA data        
Net income attributable to Mistras Group, Inc. (GAAP)  $ 3,037  $ 2,443  $ 14,221  $ 9,713
Interest expense   814  596  2,620  1,957
Provision for income taxes   1,548  1,690  8,672  6,562
Depreciation and amortization   5,765  4,845  15,989  13,608
EBITDA   $ 11,164  $ 9,574  $ 41,502  $ 31,840
Stock compensation expense   1,244  903  3,791  2,680
Acquisition-related costs  849  --   510  -- 
Legal reserve  --   --   --   351
Loss on extinguishment of long-term debt  113  --   113  -- 
Adjusted EBITDA (Non-GAAP)  $ 13,370  $ 10,477  $ 45,916  $ 34,871
 
Mistras Group, Inc.
Unaudited Reconciliation of
Net Income Attributable to Mistras Group, Inc. (GAAP) to Adjusted Net Income and Adjusted Earnings Per Share (Non-GAAP)
(in thousands)
         
   Three months ended   Nine months ended 
  February 29, 2012 February 28, 2011 February 29, 2012 February 28, 2011
Adjusted net income        
Net income attributable to Mistras Group, Inc. (GAAP)  $ 3,037  $ 2,443  $ 14,221  $ 9,713
Acquisition-related costs ($0.8 million and $0.5 million, pre-tax for each of the three and nine months ended February 29, 2012)  565  --   317  -- 
Legal reserve ($0.4 million, pre-tax for the nine months ended February 28, 2011)  --   --   --   209
Loss on extinguishment of long-term debt ($0.1 million, pre-tax for each of the three and nine months ended February 29, 2012)  75  --   70  -- 
Adjusted net income (Non-GAAP)  $ 3,677  $ 2,443  $ 14,608  $ 9,922
         
Adjusted diluted net earnings per common share        
Diluted earnings per common share (GAAP)  $ 0.11  $ 0.09  $ 0.50  $ 0.36
Acquisition-related costs  0.02  --   0.01  -- 
Legal reserve  --   --   --   0.01
Loss on extinguishment of long-term debt  --   --   --   -- 
Adjusted diluted net earnings per common share (Non-GAAP)  $ 0.13  $ 0.09  $ 0.51  $ 0.37
CONTACT: Nestor S. Makarigakis,
         Manager of Marketing Communications,
         marcom@mistrasgroup.com,
         1(609)716-4000

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