PRINCETON JUNCTION, N.J., Aug. 6, 2014 (GLOBE NEWSWIRE) -- Mistras Group, Inc. (NYSE:MG), a leading "one source" global provider of technology-enabled asset protection solutions, today reported financial results for its fourth quarter and entire fiscal year 2014, which ended May 31, 2014. During its fourth quarter, the Company's revenues increased 24% over prior year, reaching $179.1 million. Net income for the fourth quarter was $6.4 million, or $0.22 per diluted share, compared with a net loss of $4.6 million or $0.16 per diluted share in the prior year period. Excluding acquisition-related items and the prior year's goodwill impairment charge, net income in the fourth quarter of fiscal year 2014 was $4.9 million or $0.17 per diluted share, which exceeded the prior year's net income of $4.2 million and $0.15 per diluted share, by 16% and 13%, respectively. Adjusted EBITDA was $19.2 million in the fourth quarter of fiscal year 2014, 16% higher than the prior year fourth quarter's $16.5 million. During the entire fiscal year 2014, the Company's revenues grew 17.8% over prior year, reaching $623.5 million. Net income for fiscal year 2014 was $22.5 million, or $0.77 per diluted share, compared with $11.6 million or $0.40 per diluted share in the prior fiscal year. Excluding acquisition-related items and the prior year's goodwill impairment charge, net income was $19.9 million or $0.68 per diluted share in both fiscal 2014 and 2013. Adjusted EBITDA was $70.3 million for fiscal year 2014 compared with $68.3 million in the prior year. The Company's operations and profitability were adversely impacted by several factors during the fourth quarter of fiscal year 2014, including severance and facility closure costs, primarily in Brazil, that aggregated $0.6 million, as well as approximately $1.0 million related to start-up costs for the Alberta region of Canada for a large new customer. The impact of these items, plus adverse weather and contract start-up costs incurred in the third quarter in Alaska and France, combined to reduce adjusted EBITDA by approximately $4.5 million in the second half of fiscal year 2014. Financial Highlights: Revenues Gross Profit Operating Cash Flow Sotirios Vahaviolos, Chairman and Chief Executive Officer stated, "We are encouraged by the return of double digit organic growth in our Services segment in 2014. Our fourth quarter revenues and organic revenue growth for Services were extremely strong, driven by market share gains and a continued healthy market. Our profitability remained challenged as we continued to invest in serving the oil rich Alberta region of Canada that promises healthy growth for the future. Although our adjusted EBITDA came in at the low end of our guidance, these results included additional investment to serve this new region of Canada where we have large new contracts, as well as severance costs we incurred in our Brazilian operations to improve future results, including right-sizing and the costs to close two small US locations." "We are excited about the continued health and growth prospects of the North American oil & gas and chemical industries for the next several years, driven both by consumer demand for energy and our customers' needs to improve safety and comply with stringent environmental regulations. Our recent contract wins continue to demonstrate the market's acceptance of our employees and our company's value based service offerings." Outlook and Guidance for Fiscal 2015 The Company is introducing its guidance for fiscal year 2015 revenues and adjusted EBITDA. The Company expects its revenue to grow by 9% to 13%, to a range of from $680 million to $705 million. This revenue guidance includes the expected impact of new contracts in Canada and Alaska, and excludes the impact of any new acquisitions or large new capital projects. The Company expects that its Canadian revenue and profit growth will occur primarily in the second half of its fiscal year, based upon uptake in services from new customers. The Company expects its adjusted EBITDA to be in the range of $78 million to $84 million, representing an increase of from 11% to 20%, with more of the increase occurring in the second half of the Company's fiscal year. Conference Call In connection with this release, Mistras will hold a conference call on Thursday, August 7, 2014 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 1-866-515-2915 and use confirmation code 42082390 when prompted. The International dial-in number is 1-617-399-5129. 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; destructive testing 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. 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 Annual Report on Form 10-K for fiscal year 2013 filed with the Securities and Exchange Commission on August 14, 2013, 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" used in this release is a financial measurement not calculated in accordance with generally accepted accounting principles in the U.S. ("US GAAP"). A Reconciliation of Adjusted EBITDA to Net Income is set forth in a table attached to this press release. In addition, the Company has also included in the attached tables non-GAAP measurements "Segment and Total Company Income from Operations before Acquisition-Related Expense (Benefit), net", "Net Income Excluding Acquisition-related Items" and "Diluted EPS Excluding Acquisition-related Items," reconciling these measurements to financial measurements under US GAAP. The Company believes that investors and other users of the financial statements benefit from the presentation of these non-GAAP measurements 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 core business operations.Mistras Group, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands, except share and per share data) May 31, 2014 2013 ASSETS Current Assets Cash and cash equivalents $ 10,020 $ 7,802 Accounts receivable, net 137,824 108,554 Inventories 11,376 12,504 Deferred income taxes 3,283 3,293 Prepaid expenses and other current assets 12,626 8,156 Total current assets 175,129 140,309 Property, plant and equipment, net 77,811 68,419 Intangible assets, net 57,875 52,428 Goodwill 130,516 115,270 Deferred income taxes 1,344 665 Other assets 1,297 906 Total assets $ 443,972 $ 377,997 LIABILITIES AND EQUITY Current Liabilities Accounts payable $ 14,978 $ 8,490 Accrued expenses and other current liabilities 54,650 47,839 Current portion of long-term debt 8,058 7,418 Current portion of capital lease obligations 7,251 6,766 Income taxes payable 1,854 1,703 Total current liabilities 86,791 72,216 Long-term debt, net of current portion 68,590 52,849 Obligations under capital leases, net of current portion 13,664 10,923 Deferred income taxes 15,521 12,951 Other long-term liabilities 17,014 18,778 Total liabilities 201,580 167,717 Commitments and contingencies Equity Preferred stock, 10,000,000 shares authorized -- -- Common stock, $0.01 par value, 200,000,000 shares authorized 284 282 Additional paid-in capital 201,831 195,241 Retained earnings 41,500 18,982 Accumulated other comprehensive loss (1,511) (4,452) Total Mistras Group, Inc. stockholders' equity 242,104 210,053 Noncontrolling interests 288 227 Total equity 242,392 210,280 Total liabilities and equity $ 443,972 $ 377,997 Mistras Group, Inc. and Subsidiaries Unaudited Condensed Consolidated Statements of Income (in thousands, except per share data) Three months ended May 31, Year ended May 31, 2014 2013 2014 2013 Revenues: Services $ 168,468 $ 135,802 $ 582,916 $ 487,268 Products and systems 10,659 8,703 40,531 42,014 Total revenues 179,127 144,505 623,447 529,282 Cost of revenues: Cost of services 124,290 98,000 415,970 346,769 Cost of products and systems sold 3,760 3,254 16,725 16,276 Depreciation related to services 4,401 4,398 16,734 16,963 Depreciation related to products and systems 287 310 1,075 903 Total cost of revenues 132,738 105,962 450,504 380,911 Gross profit 46,389 38,543 172,943 148,371 Selling, general and administrative expenses 33,348 27,729 123,690 101,792 Research and engineering 809 646 2,995 2,447 Depreciation and amortization 2,891 2,246 10,620 8,781 Acquisition-related (benefit), net (1,127) (1,135) (2,657) (2,141) Goodwill impairment -- 9,938 -- 9,938 Income from operations 10,468 (881) 38,295 27,554 Interest expense 883 830 3,192 3,288 Income before provision for income taxes 9,585 (1,711) 35,103 24,266 Provision for income taxes 3,153 2,878 12,528 12,627 Net income 6,432 (4,589) 22,575 11,639 Less: net (income) loss attributable to noncontrolling interests, net of taxes (13) 40 (57) 7 Net income attributable to Mistras Group, Inc. $ 6,419 $ (4,549) $ 22,518 $ 11,646 Earnings per common share Basic $ 0.23 $ (0.16) $ 0.79 $ 0.41 Diluted $ 0.22 $ (0.16) $ 0.77 $ 0.40 Weighted average common shares outstanding: Basic 28,446 28,202 28,365 28,141 Diluted 29,479 29,140 29,324 29,106 Mistras Group, Inc. and Subsidiaries Unaudited Operating Data by Segment (in thousands) Three months ended May 31, Year ended May 31, 2014 2013 2014 2013 Revenues Services $ 129,435 $ 102,704 $ 443,229 $ 380,851 International 42,363 38,118 161,395 126,840 Products and Systems 10,745 7,683 33,544 33,301 Corporate and eliminations (3,416) (4,000) (14,721) (11,710) $ 179,127 $ 144,505 $ 623,447 $ 529,282 Three months ended May 31, Year ended May 31, 2014 2013 2014 2013 Gross profit Services $ 30,301 $ 26,779 $ 114,182 $ 98,907 International 11,394 8,088 44,893 32,319 Products and Systems 4,719 3,937 14,495 16,947 Corporate and eliminations (25) (261) (627) 198 $ 46,389 $ 38,543 $ 172,943 $ 148,371 Mistras Group, Inc. and Subsidiaries Unaudited Reconciliation of Segment and Total Company Income (Loss) from Operations before Acquisition-Related Expense (Benefit), net (non-GAAP) to Segment and Total Company Income (Loss) from Operations (GAAP) (in thousands) Three months ended May 31, Year ended May 31, 2014 2013 2014 2013 Services: Income from operations before acquisition-related expense, net $ 11,685 $ 11,998 $ 44,846 $ 41,750 Acquisition-related expense, net 1,162 270 1,625 1,425 Income from operations 10,523 11,728 43,221 40,325 International: Income from operations before acquisition-related expense (benefit), net
and goodwill impairment$ 1,260 $ (1,311) $ 6,786 $ 2,596 Acquisition-related expense (benefit), net and goodwill impairment 214 10,392 (3,452) 10,842 Income from operations 1,046 (11,703) 10,238 (8,246) Products and Systems: Income from operations before acquisition-related expense (benefit), net $ 1,405 $ 829 $ 1,517 $ 4,883 Acquisition-related expense (benefit), net -- 24 (1,035) (2,403) Income from operations 1,405 805 2,552 7,286 Corporate and Eliminations: Income from operations before acquisition-related (benefit) expense, net $ (5,009) $ (3,594) $ (17,511) $ (13,878) Acquisition-related (benefit) expense, net (2,503) (1,883) 205 (2,067) Income from operations (2,506) (1,711) (17,716) (11,811) Total Company Income from operations before acquisition-related (benefit) expense, net
and goodwill impairment$ 9,341 $ 7,922 $ 35,638 $ 35,351 Acquisition-related (benefit) expense, net and goodwill impairment $ (1,127) $ 8,803 $ (2,657) $ 7,797 Income from operations $ 10,468 $ (881) $ 38,295 $ 27,554 Mistras Group, Inc. and Subsidiaries Unaudited Reconciliation of Summary Cash Flows Table (in thousands) Year ended May 31, 2014 2013 Net cash provided by (used in): Operating Activities $ 36,873 $ 43,503 Investing Activities (38,005) (45,479) Financing Activities 3,262 1,144 Effect of exchange rate changes on cash 88 224 Net change in cash and cash equivalents $ 2,218 $ (608) Mistras Group, Inc. and Subsidiaries Unaudited Reconciliation of
Net Income to Adjusted EBITDA(in thousands) Three months ended May 31, Year ended May 31, 2014 2013 2014 2013 Net Income $ 6,432 $ (4,589) $ 22,575 $ 11,639 Less: net income attributable to noncontrolling interests, net of taxes (13) 40 (57) 7 Net income attributable to Mistras Group, Inc. $ 6,419 $ (4,549) $ 22,518 $ 11,646 Interest expense 883 830 3,192 3,288 Provision for income taxes 3,153 2,878 12,528 12,627 Depreciation and amortization 7,579 6,954 28,429 26,647 Share-based compensation expense 2,248 1,536 6,261 6,285 Acquisition-related (benefit), net (1,127) (1,135) (2,657) (2,141) Goodwill impairment -- 9,938 -- 9,938 Adjusted EBITDA $ 19,155 $ 16,452 $ 70,271 $ 68,290 Mistras Group, Inc. and Subsidiaries Unaudited Reconciliation of Net Income (GAAP) and Diluted Earnings Per Share (GAAP) to Net Income Excluding Acquisition-related Items (non-GAAP) and Diluted EPS Excluding Acquisition-related Items (non-GAAP) (in thousands except per share data) Three months ended May 31, Year ended May 31, 2014 2013 2014 2013 Net income (GAAP) $ 6,432 $ (4,589) $ 22,575 $ 11,639 Acquisition-related (benefit), net of tax (1,526) (1,109) (2,684) (1,634) Goodwill impairment -- 9,938 -- 9,938 Net Income Excluding Acquisition-related Items (non-GAAP) $ 4,906 $ 4,240 $ 19,891 $ 19,943 Diluted earnings per common share (GAAP) $ 0.22 $ (0.16) $ 0.77 $ 0.40 Acquisition-related (benefit), net (0.05) (0.04) (0.09) (0.06) Goodwill impairment -- 0.35 -- 0.34 Diluted EPS Excluding Acquisition-related Items (non-GAAP) $ 0.17 $ 0.15 $ 0.68 $ 0.68 Acquisition-related (benefit), net of tax, includes income tax expense (benefit) of $(399) thousand and $26 thousand for the three months ended May 31, 2014 and 2013, respectively and $(27) thousand and $507 thousand for the year ended May 31, 2014 and 2013, respectively. The aforementioned tax expense are reflective of non-deductible and non-taxable tax differences related to acquisitions of common stock. CONTACT: Nestor S. Makarigakis
Group Director of Marketing Communications
marcom@mistrasgroup.com
1(609)716-4000
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