[10-Q] Mistras Group Inc. Quarterly Earnings Report
Filing Impact
Filing Sentiment
Form Type
10-Q
Mistras Group, Inc. reported total revenue of $185.4 million for the quarter ended June 30, 2025, down from $189.8 million a year earlier, reflecting a 2.3% decline driven primarily by lower North America oil & gas activity and voluntary laboratory consolidations. Gross profit rose to $53.9 million from $51.3 million, lifting gross margin to 29.1% from 27.1%, while operating income fell to $8.4 million from $12.0 million. The company recorded net income of $3.1 million for the quarter; for the six months the company reported a small net loss of $42 thousand versus net income of $7.4 million in the prior year.
Total assets increased to $571.0 million and accounts receivable rose to $159.8 million, with unbilled revenue of $41.0 million at June 30, 2025. Debt outstanding totaled $189.4 million, and the company drew on its revolver during the period; management states it remains in compliance with its credit covenants and believes it can meet liquidity needs. The filing discloses an active environmental lawsuit in Arizona related to a Phoenix testing facility; remediation costs and penalties are considered probable but not yet estimable, representing a material uncertainty.
Mistras Group, Inc. ha registrato ricavi totali per $185.4 milioni nel trimestre chiuso il 30 giugno 2025, in calo rispetto ai $189.8 milioni dell'anno precedente (-2,3%), principalmente per una minore attivit脿 oil & gas in Nord America e per consolidamenti volontari di laboratori. L'utile lordo 猫 salito a $53.9 milioni da $51.3 milioni, portando il margine lordo al 29,1% dal 27,1%, mentre il risultato operativo 猫 sceso a $8.4 milioni dai $12.0 milioni. La societ脿 ha riportato un utile netto di $3.1 milioni nel trimestre; nei primi sei mesi ha invece registrato una lieve perdita netta di $42,000 rispetto a un utile netto di $7.4 milioni dell'anno precedente.
Le attivit脿 totali sono aumentate a $571.0 milioni e i crediti verso clienti sono saliti a $159.8 milioni, con ricavi non fatturati pari a $41.0 milioni al 30 giugno 2025. Il debito in essere ammontava a $189.4 milioni e la societ脿 ha utilizzato la linea di credito nel periodo; la direzione afferma di essere in regola con i covenant e ritiene di poter far fronte alle esigenze di liquidit脿. Il deposito rivela una controversia ambientale attiva in Arizona relativa a un centro di test a Phoenix: i costi di bonifica e le eventuali sanzioni sono ritenuti probabili ma non ancora stimabili, rappresentando un'incertezza significativa.
Mistras Group, Inc. inform贸 ingresos totales de $185.4 millones para el trimestre cerrado el 30 de junio de 2025, frente a $189.8 millones un a帽o antes, una disminuci贸n del 2.3% atribuible principalmente a menor actividad de oil & gas en Norteam茅rica y a consolidaciones voluntarias de laboratorios. La ganancia bruta aument贸 a $53.9 millones desde $51.3 millones, elevando el margen bruto al 29.1% desde el 27.1%, mientras que el resultado operativo cay贸 a $8.4 millones desde $12.0 millones. La compa帽铆a registr贸 un beneficio neto de $3.1 millones en el trimestre; en los seis meses report贸 una peque帽a p茅rdida neta de $42,000 frente a un beneficio neto de $7.4 millones del a帽o anterior.
Los activos totales aumentaron a $571.0 millones y las cuentas por cobrar subieron a $159.8 millones, con ingresos no facturados de $41.0 millones al 30 de junio de 2025. La deuda pendiente ascend铆a a $189.4 millones, y la compa帽铆a utiliz贸 su l铆nea revolvente durante el periodo; la direcci贸n indica que cumple con sus convenios de cr茅dito y considera que puede cubrir sus necesidades de liquidez. La presentaci贸n revela una demanda ambiental activa en Arizona relacionada con una instalaci贸n de pruebas en Phoenix; se consideran probables los costos de remediaci贸n y las sanciones, aunque todav铆a no son estimables, lo que constituye una incertidumbre material.
Mistras Group, Inc.電� 2025雲� 6鞗� 30鞚茧 膦呺霅� 攵勱赴鞐� 齑� 毵れ稖 $185.4 million鞚� 氤搓碃頄堨溂氅�, 鞚措姅 鞝勲厔 霃欔赴 $189.8 million 雽�牍� 2.3% 臧愳唽頃� 靾橃箻搿� 欤茧 攵侂 歆�鞐潣 靹濎湢路臧�鞀� 頇滊彊 臧愳唽鞕� 鞛愲皽鞝侅澑 鞁ろ棙鞁� 韱淀暕鞚� 鞗愳澑鞛呺媹雼�. 齑濎澊鞚奠潃 $51.3 million鞐愳劀 $53.9 million鞙茧 歃濌皜頃� 齑濍歆勳潃 27.1%鞐愳劀 29.1%搿� 靸侅姽頄堨溂雮� 鞓侅梾鞚挫澋鞚� $12.0 million鞐愳劀 $8.4 million搿� 臧愳唽頄堨姷雼堧嫟. 須岇偓電� 攵勱赴 靾滌澊鞚� $3.1 million鞚� 旮半頄堨溂氅�, 靸侂皹旮� 旮办鞙茧電� $42,000鞚� 靻岇暋 靾滌啇鞁れ潉 氤搓碃頃� 鞝勲厔鞚� $7.4 million 靾滌澊鞚店臣 雽�牍勲惄雼堧嫟.
齑濎瀽靷办潃 $571.0 million鞙茧 歃濌皜頄堦碃 毵れ稖毂勱秾鞚� $159.8 million鞙茧 電橃棃鞙茧┌, 2025雲� 6鞗� 30鞚� 旮办 氙胳箔甑� 靾橃澋鞚� $41.0 million鞛呺媹雼�. 旮半 攵�毂� 鞛旍暋鞚� $189.4 million鞚挫棃瓿� 旮瓣皠 欷� 毽臣牍� 鞁犾毄鞚� 靷毄頄堨姷雼堧嫟. 瓴届榿歆勳潃 鞁犾毄瓿勳暯鞚� 欷�靾橅晿瓿� 鞛堨溂氅� 鞙犽彊靹� 靾橃殧毳� 於╈”頃� 靾� 鞛堧嫟瓿� 氤搓碃頃╇媹雼�. 氤搓碃靹滌棎電� 頂茧媺鞀� 鞁滍棙鞁滌劋瓿� 甏�霠暣 鞎犽Μ臁半倶鞐愳劀 歆勴枆 欷戩澑 頇橁步 靻岇啞鞚� 瓿店皽霅橃柎 鞛堨溂氅�, 鞝曧檾 牍勳毄瓿� 氩岅笀鞚� 氚滌儩頃� 臧�電レ劚鞚� 雴掛溂雮� 鞎勳 於旍爼 攵堦皜頃� 欷戨寑頃� 攵堩檿鞁れ劚鞚� 臁挫灛頃╇媹雼�.
Mistras Group, Inc. a d茅clar茅 un chiffre d'affaires total de $185.4 millions pour le trimestre clos le 30 juin 2025, contre $189.8 millions un an plus t么t, soit une baisse de 2,3% principalement due 脿 une moindre activit茅 oil & gas en Am茅rique du Nord et 脿 des consolidations volontaires de laboratoires. Le b茅n茅fice brut est pass茅 de $51.3 millions 脿 $53.9 millions, portant la marge brute 脿 29.1% contre 27.1%, tandis que le r茅sultat d'exploitation est tomb茅 脿 $8.4 millions contre $12.0 millions. La soci茅t茅 a enregistr茅 un b茅n茅fice net de $3.1 millions pour le trimestre ; sur les six premiers mois, elle a affich茅 une petite perte nette de $42,000 contre un b茅n茅fice net de $7.4 millions l'ann茅e pr茅c茅dente.
Les actifs totaux ont augment茅 脿 $571.0 millions et les comptes clients sont pass茅s 脿 $159.8 millions, avec des revenus non factur茅s de $41.0 millions au 30 juin 2025. La dette en cours s'茅levait 脿 $189.4 millions, et la soci茅t茅 a tir茅 sur sa ligne de cr茅dit au cours de la p茅riode ; la direction indique rester en conformit茅 avec ses covenants de cr茅dit et estime pouvoir faire face 脿 ses besoins de liquidit茅. Le d茅p么t r茅v猫le une action judiciaire environnementale active en Arizona li茅e 脿 une installation de test 脿 Phoenix ; les co没ts de rem茅diation et les p茅nalit茅s sont consid茅r茅s comme probables mais pas encore estimables, constituant une incertitude significative.
Mistras Group, Inc. meldete f眉r das Quartal zum 30. Juni 2025 einen Gesamtumsatz von $185.4 Millionen, gegen眉ber $189.8 Millionen im Vorjahr 鈥� ein R眉ckgang von 2,3%, haupts盲chlich bedingt durch geringere 脰l- und Gasaktivit盲ten in Nordamerika und freiwillige Labor-Konsolidierungen. Der Bruttogewinn stieg von $51.3 Millionen auf $53.9 Millionen, wodurch die Bruttomarge von 27,1% auf 29.1% anstieg, w盲hrend das Betriebsergebnis von $12.0 Millionen auf $8.4 Millionen sank. Das Unternehmen verbuchte einen Quartalsnettogewinn von $3.1 Millionen; f眉r die ersten sechs Monate wurde dagegen ein kleiner Nettverlust von $42,000 ausgewiesen, gegen眉ber einem Nettogewinn von $7.4 Millionen im Vorjahr.
Die Gesamtaktiva stiegen auf $571.0 Millionen und die Forderungen aus Lieferungen und Leistungen auf $159.8 Millionen, mit nicht in Rechnung gestellten Ums盲tzen von $41.0 Millionen zum 30. Juni 2025. Die ausstehende Verschuldung belief sich auf $189.4 Millionen, und das Unternehmen zog w盲hrend des Zeitraums Geld von seiner revolvierenden Kreditlinie ab; die Unternehmensf眉hrung erkl盲rt, die Kreditvereinbarungen einzuhalten und die Liquidit盲tsbed眉rfnisse decken zu k枚nnen. Die Einreichung offenbart einen laufenden Umweltprozess in Arizona im Zusammenhang mit einer Pr眉feinrichtung in Phoenix; Sanierungsaufwendungen und Strafen werden als wahrscheinlich erachtet, sind jedoch noch nicht sch盲tzbar und stellen eine wesentliche Unsicherheit dar.
Positive
- Gross margin expansion to 29.1% from 27.1%, reflecting improved cost presentation or operational efficiency
- International revenue growth of 14.0% in the quarter, driven by organic growth and favorable foreign exchange
- Liquidity access: cash of $19.96M and a $190M credit facility with management reporting covenant compliance
Negative
- Revenue declined 2.3% for the quarter and 7.3% year-to-date, with North America down 5.4% (Q) and 9.7% (YTD)
- Operating income and profitability weakened: Q2 operating income fell to $8.4M from $12.0M and YTD results include a $42k net loss vs prior year $7.4M income
- Leverage increased with total debt of $189.4M and higher accounts receivable ($159.8M), raising working capital pressure
- Regulatory and legal risk: Arizona DEQ lawsuit and EPA inquiries 鈥� remediation costs deemed probable but not estimable
Insights
TL;DR: Revenue softened but margins improved; liquidity appears intact while operating income and YTD profitability weakened.
The quarter shows mixed operational performance: a modest top-line decline driven by North America oil & gas and lab consolidation, offset by a higher gross margin (29.1% vs 27.1%) that indicates better cost allocation or lower SG&A as reclassified. Sequentially, operating income and six-month profitability deteriorated, producing a near-breakeven YTD result. Accounts receivable and unbilled receivables increased materially, tying up working capital. Leverage rose with total debt of $189.4 million and active revolver utilization, but the company reports covenant compliance and ~ $20.0 million cash on hand. For investors, the key metrics to monitor are revenue recovery in North America, conversion of receivables to cash, and any quantified remediation cost from the Arizona matter.
TL;DR: Environmental litigation and probable remediation exposure present a significant near-term operational and financial risk.
The filing discloses an ongoing lawsuit by the Arizona Department of Environmental Quality seeking injunctive relief and potential penalties related to chromic acid operations at the Phoenix testing facility; the company completed facility improvements and resumed operations but notes remediation costs, fines or penalties are probable and cannot yet be reasonably estimated. Additionally, the EPA identified the Phoenix site as a potentially responsible party in the Motorola Superfund area and has requested information. These unresolved regulatory matters introduce litigation, remediation and reputational risks that could be material depending on final remediation obligations and insurance coverage realization.
Mistras Group, Inc. ha registrato ricavi totali per $185.4 milioni nel trimestre chiuso il 30 giugno 2025, in calo rispetto ai $189.8 milioni dell'anno precedente (-2,3%), principalmente per una minore attivit脿 oil & gas in Nord America e per consolidamenti volontari di laboratori. L'utile lordo 猫 salito a $53.9 milioni da $51.3 milioni, portando il margine lordo al 29,1% dal 27,1%, mentre il risultato operativo 猫 sceso a $8.4 milioni dai $12.0 milioni. La societ脿 ha riportato un utile netto di $3.1 milioni nel trimestre; nei primi sei mesi ha invece registrato una lieve perdita netta di $42,000 rispetto a un utile netto di $7.4 milioni dell'anno precedente.
Le attivit脿 totali sono aumentate a $571.0 milioni e i crediti verso clienti sono saliti a $159.8 milioni, con ricavi non fatturati pari a $41.0 milioni al 30 giugno 2025. Il debito in essere ammontava a $189.4 milioni e la societ脿 ha utilizzato la linea di credito nel periodo; la direzione afferma di essere in regola con i covenant e ritiene di poter far fronte alle esigenze di liquidit脿. Il deposito rivela una controversia ambientale attiva in Arizona relativa a un centro di test a Phoenix: i costi di bonifica e le eventuali sanzioni sono ritenuti probabili ma non ancora stimabili, rappresentando un'incertezza significativa.
Mistras Group, Inc. inform贸 ingresos totales de $185.4 millones para el trimestre cerrado el 30 de junio de 2025, frente a $189.8 millones un a帽o antes, una disminuci贸n del 2.3% atribuible principalmente a menor actividad de oil & gas en Norteam茅rica y a consolidaciones voluntarias de laboratorios. La ganancia bruta aument贸 a $53.9 millones desde $51.3 millones, elevando el margen bruto al 29.1% desde el 27.1%, mientras que el resultado operativo cay贸 a $8.4 millones desde $12.0 millones. La compa帽铆a registr贸 un beneficio neto de $3.1 millones en el trimestre; en los seis meses report贸 una peque帽a p茅rdida neta de $42,000 frente a un beneficio neto de $7.4 millones del a帽o anterior.
Los activos totales aumentaron a $571.0 millones y las cuentas por cobrar subieron a $159.8 millones, con ingresos no facturados de $41.0 millones al 30 de junio de 2025. La deuda pendiente ascend铆a a $189.4 millones, y la compa帽铆a utiliz贸 su l铆nea revolvente durante el periodo; la direcci贸n indica que cumple con sus convenios de cr茅dito y considera que puede cubrir sus necesidades de liquidez. La presentaci贸n revela una demanda ambiental activa en Arizona relacionada con una instalaci贸n de pruebas en Phoenix; se consideran probables los costos de remediaci贸n y las sanciones, aunque todav铆a no son estimables, lo que constituye una incertidumbre material.
Mistras Group, Inc.電� 2025雲� 6鞗� 30鞚茧 膦呺霅� 攵勱赴鞐� 齑� 毵れ稖 $185.4 million鞚� 氤搓碃頄堨溂氅�, 鞚措姅 鞝勲厔 霃欔赴 $189.8 million 雽�牍� 2.3% 臧愳唽頃� 靾橃箻搿� 欤茧 攵侂 歆�鞐潣 靹濎湢路臧�鞀� 頇滊彊 臧愳唽鞕� 鞛愲皽鞝侅澑 鞁ろ棙鞁� 韱淀暕鞚� 鞗愳澑鞛呺媹雼�. 齑濎澊鞚奠潃 $51.3 million鞐愳劀 $53.9 million鞙茧 歃濌皜頃� 齑濍歆勳潃 27.1%鞐愳劀 29.1%搿� 靸侅姽頄堨溂雮� 鞓侅梾鞚挫澋鞚� $12.0 million鞐愳劀 $8.4 million搿� 臧愳唽頄堨姷雼堧嫟. 須岇偓電� 攵勱赴 靾滌澊鞚� $3.1 million鞚� 旮半頄堨溂氅�, 靸侂皹旮� 旮办鞙茧電� $42,000鞚� 靻岇暋 靾滌啇鞁れ潉 氤搓碃頃� 鞝勲厔鞚� $7.4 million 靾滌澊鞚店臣 雽�牍勲惄雼堧嫟.
齑濎瀽靷办潃 $571.0 million鞙茧 歃濌皜頄堦碃 毵れ稖毂勱秾鞚� $159.8 million鞙茧 電橃棃鞙茧┌, 2025雲� 6鞗� 30鞚� 旮办 氙胳箔甑� 靾橃澋鞚� $41.0 million鞛呺媹雼�. 旮半 攵�毂� 鞛旍暋鞚� $189.4 million鞚挫棃瓿� 旮瓣皠 欷� 毽臣牍� 鞁犾毄鞚� 靷毄頄堨姷雼堧嫟. 瓴届榿歆勳潃 鞁犾毄瓿勳暯鞚� 欷�靾橅晿瓿� 鞛堨溂氅� 鞙犽彊靹� 靾橃殧毳� 於╈”頃� 靾� 鞛堧嫟瓿� 氤搓碃頃╇媹雼�. 氤搓碃靹滌棎電� 頂茧媺鞀� 鞁滍棙鞁滌劋瓿� 甏�霠暣 鞎犽Μ臁半倶鞐愳劀 歆勴枆 欷戩澑 頇橁步 靻岇啞鞚� 瓿店皽霅橃柎 鞛堨溂氅�, 鞝曧檾 牍勳毄瓿� 氩岅笀鞚� 氚滌儩頃� 臧�電レ劚鞚� 雴掛溂雮� 鞎勳 於旍爼 攵堦皜頃� 欷戨寑頃� 攵堩檿鞁れ劚鞚� 臁挫灛頃╇媹雼�.
Mistras Group, Inc. a d茅clar茅 un chiffre d'affaires total de $185.4 millions pour le trimestre clos le 30 juin 2025, contre $189.8 millions un an plus t么t, soit une baisse de 2,3% principalement due 脿 une moindre activit茅 oil & gas en Am茅rique du Nord et 脿 des consolidations volontaires de laboratoires. Le b茅n茅fice brut est pass茅 de $51.3 millions 脿 $53.9 millions, portant la marge brute 脿 29.1% contre 27.1%, tandis que le r茅sultat d'exploitation est tomb茅 脿 $8.4 millions contre $12.0 millions. La soci茅t茅 a enregistr茅 un b茅n茅fice net de $3.1 millions pour le trimestre ; sur les six premiers mois, elle a affich茅 une petite perte nette de $42,000 contre un b茅n茅fice net de $7.4 millions l'ann茅e pr茅c茅dente.
Les actifs totaux ont augment茅 脿 $571.0 millions et les comptes clients sont pass茅s 脿 $159.8 millions, avec des revenus non factur茅s de $41.0 millions au 30 juin 2025. La dette en cours s'茅levait 脿 $189.4 millions, et la soci茅t茅 a tir茅 sur sa ligne de cr茅dit au cours de la p茅riode ; la direction indique rester en conformit茅 avec ses covenants de cr茅dit et estime pouvoir faire face 脿 ses besoins de liquidit茅. Le d茅p么t r茅v猫le une action judiciaire environnementale active en Arizona li茅e 脿 une installation de test 脿 Phoenix ; les co没ts de rem茅diation et les p茅nalit茅s sont consid茅r茅s comme probables mais pas encore estimables, constituant une incertitude significative.
Mistras Group, Inc. meldete f眉r das Quartal zum 30. Juni 2025 einen Gesamtumsatz von $185.4 Millionen, gegen眉ber $189.8 Millionen im Vorjahr 鈥� ein R眉ckgang von 2,3%, haupts盲chlich bedingt durch geringere 脰l- und Gasaktivit盲ten in Nordamerika und freiwillige Labor-Konsolidierungen. Der Bruttogewinn stieg von $51.3 Millionen auf $53.9 Millionen, wodurch die Bruttomarge von 27,1% auf 29.1% anstieg, w盲hrend das Betriebsergebnis von $12.0 Millionen auf $8.4 Millionen sank. Das Unternehmen verbuchte einen Quartalsnettogewinn von $3.1 Millionen; f眉r die ersten sechs Monate wurde dagegen ein kleiner Nettverlust von $42,000 ausgewiesen, gegen眉ber einem Nettogewinn von $7.4 Millionen im Vorjahr.
Die Gesamtaktiva stiegen auf $571.0 Millionen und die Forderungen aus Lieferungen und Leistungen auf $159.8 Millionen, mit nicht in Rechnung gestellten Ums盲tzen von $41.0 Millionen zum 30. Juni 2025. Die ausstehende Verschuldung belief sich auf $189.4 Millionen, und das Unternehmen zog w盲hrend des Zeitraums Geld von seiner revolvierenden Kreditlinie ab; die Unternehmensf眉hrung erkl盲rt, die Kreditvereinbarungen einzuhalten und die Liquidit盲tsbed眉rfnisse decken zu k枚nnen. Die Einreichung offenbart einen laufenden Umweltprozess in Arizona im Zusammenhang mit einer Pr眉feinrichtung in Phoenix; Sanierungsaufwendungen und Strafen werden als wahrscheinlich erachtet, sind jedoch noch nicht sch盲tzbar und stellen eine wesentliche Unsicherheit dar.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 30, 2025
Or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from __ to __
Commission file number 001-34481
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(609 ) 716-4000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
ý Yes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
ý Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller
reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | o | x | ||||||||||||
Non-accelerated filer | o | Smaller reporting company | ||||||||||||
| Emerging Growth Company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
As of August 6, 2025, the registrant had 31,538,050 shares of common stock outstanding.
Table of Contents
TABLE OF CONTENTS
| PAGE | |||||||||||
PART I—FINANCIAL INFORMATION | |||||||||||
ITEM 1. | Financial Statements | 1 | |||||||||
Unaudited Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 | 1 | ||||||||||
Unaudited Condensed Consolidated Statements of Income (Loss) for the three and six months ended June 30, 2025 and June 30, 2024 | 2 | ||||||||||
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2025 and June 30, 2024 | 3 | ||||||||||
Unaudited Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2025 and June 30, 2024 | 4 | ||||||||||
Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and June 30, 2024 | 5 | ||||||||||
Notes to Unaudited Condensed Consolidated Financial Statements | 6 | ||||||||||
ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25 | |||||||||
ITEM 3. | Quantitative and Qualitative Disclosures about Market Risk | 36 | |||||||||
ITEM 4 | Controls and Procedures | 36 | |||||||||
PART II—OTHER INFORMATION | |||||||||||
ITEM 1. | Legal Proceedings | 37 | |||||||||
ITEM 1.A. | Risk Factors | 37 | |||||||||
ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 37 | |||||||||
ITEM 3. | Defaults Upon Senior Securities | 37 | |||||||||
ITEM 4. | Mine Safety Disclosures | 37 | |||||||||
ITEM 5. | Other Information | 37 | |||||||||
ITEM 6. | Exhibits | 38 | |||||||||
SIGNATURES | 39 | ||||||||||
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PART I—FINANCIAL INFORMATION
ITEM 1. Financial Statements
Mistras Group, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
| June 30, 2025 | December 31, 2024 | ||||||||||
| ASSETS | (unaudited) | ||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Deferred income taxes | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Current portion of long-term debt | |||||||||||
| Current portion of finance lease obligations | |||||||||||
| Income taxes payable | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt, net of current portion | |||||||||||
| Obligations under finance leases, net of current portion | |||||||||||
| Deferred income taxes | |||||||||||
| Other long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (Note 13) | |||||||||||
| Equity | |||||||||||
Preferred stock, | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total Mistras Group, Inc. stockholders’ equity | |||||||||||
| Non-controlling interests | |||||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
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Mistras Group, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Income (Loss)
(in thousands, except per share data)
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||||||||||||||
| Depreciation | |||||||||||||||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||||||||||||||
| Reorganization and other costs | |||||||||||||||||||||||||||||||||||
| Environmental expense | |||||||||||||||||||||||||||||||||||
| Legal settlement and insurance recoveries, net | |||||||||||||||||||||||||||||||||||
| Research and engineering | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||||||||
| Income from operations | |||||||||||||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||||||||
| Income (loss) before provision (benefit) for income taxes | ( | ||||||||||||||||||||||||||||||||||
| Provision (benefit) for income taxes | ( | ||||||||||||||||||||||||||||||||||
| Net income (loss) | ( | ||||||||||||||||||||||||||||||||||
| Less: net income attributable to noncontrolling interests, net of taxes | |||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to Mistras Group, Inc. | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
| Net income (loss) per common share | |||||||||||||||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||||||||||||||||||||
| Basic | |||||||||||||||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
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Mistras Group, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||
| Net income (loss) | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Other comprehensive income: | ||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
| Comprehensive income | ||||||||||||||||||||||||||||||||
| Less: net income attributable to noncontrolling interest | ||||||||||||||||||||||||||||||||
| Less: Foreign currency translation adjustments attributable to noncontrolling interests | ( | ( | ||||||||||||||||||||||||||||||
| Comprehensive income attributable to Mistras Group, Inc. | $ | $ | $ | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
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Mistras Group, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Equity
(in thousands)
| Three months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive loss | Total Mistras Group, Inc. stockholders’ equity | Non-controlling interests | |||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based payments | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Net settlement of restricted stock units | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Share-based payments | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Net settlement of restricted stock units | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive loss | Total Mistras Group, Inc. stockholders’ equity | Non-controlling interests | |||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based payments | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Net settlement of restricted stock units | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Share-based payments | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Net settlement of restricted stock units | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
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Mistras Group, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(In Thousands)
| Six months ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net (loss) income | $ | ( | $ | ||||||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities | |||||||||||
| Depreciation and amortization | |||||||||||
| Deferred income taxes | ( | ( | |||||||||
| Share-based compensation expense | |||||||||||
| Bad debt provision for troubled customers, net of recoveries | |||||||||||
| Foreign currency loss (gain) | ( | ||||||||||
| Other | ( | ( | |||||||||
| Changes in operating assets and liabilities, net of effect of acquisitions and dispositions | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Inventories | ( | ( | |||||||||
| Prepaid expenses and other assets | ( | ( | |||||||||
| Accounts payable | ( | ||||||||||
| Accrued expenses and other liabilities | |||||||||||
| Income taxes payable | ( | ||||||||||
| Net cash (used in) provided by operating activities | ( | ||||||||||
| Cash flows from investing activities | |||||||||||
| Purchase of property, plant and equipment | ( | ( | |||||||||
| Purchase of intangible assets | ( | ( | |||||||||
| Proceeds from sale of equipment | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities | |||||||||||
| Repayment of finance lease obligations | ( | ( | |||||||||
| Repayment of long-term debt | ( | ( | |||||||||
| Proceeds from revolver | |||||||||||
| Repayment of revolver | ( | ( | |||||||||
| Taxes paid related to net share settlement of share-based awards | ( | ( | |||||||||
| Net cash provided by financing activities | |||||||||||
| Effect of exchange rate changes on cash and cash equivalents | |||||||||||
| Net change in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental disclosure of cash paid | |||||||||||
| Interest, net | $ | $ | |||||||||
| Income taxes, net of refunds | $ | $ | |||||||||
| Noncash investing and financing | |||||||||||
| Equipment acquired through finance lease obligations | $ | $ | |||||||||
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
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Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
1. Description of Business and Basis of Presentation
Description of Business
Mistras Group, Inc., together with its subsidiaries (the "Company"), 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, the Company helps customers with asset-intensive infrastructure in the oil and gas, aerospace and defense, industrials, power generation and transmission (including alternative and renewable energy), other process industries and infrastructure, research and engineering and other 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; building real-time monitoring equipment to enable safe travel across bridges; and helping to propel sustainability, the Company helps the world at large.
The Company enhances value for its clients by integrating asset protection throughout supply chains and centralizing integrity data through a suite of Industrial Internet of Things ("IoT")-connected digital software and monitoring solutions, including OneSuite™, which serves as an ecosystem platform, pulling together all of the Company’s software and data services capabilities, for the benefit of its customers.
The Company’s core capabilities also include non-destructive testing ("NDT") field inspections enhanced by advanced robotics, laboratory quality control, laboratory materials services, shop laboratory assurance testing, sensing technologies and NDT equipment, asset and mechanical integrity engineering services, and light mechanical maintenance and access services.
The Company has three operating segments. Our segments are as follows:
•North America: This segment provides asset protection solutions predominantly in North America, with the largest concentration in the United States, followed by Canada, consisting primarily of NDT, inspection, mechanical and engineering services that are used to evaluate the safety, structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components. Software, digital and data services are included in this segment.
•International: This segment offers services, products and systems similar to those of the other segments to select markets within Europe, the Middle East, Africa, Asia and South America, but not to customers in China and South Korea, which are served by the Products and Systems segment.
•Products and Systems: This segment designs, manufactures, sells, installs and services the Company’s asset protection products and systems, including equipment and instrumentation, predominantly in the United States.
Recent Developments
We may continue to experience increased costs associated with tariffs or trade barriers, including recent U.S. tariffs imposed or threatened to be imposed on China, Canada, Mexico and other countries and any retaliatory actions taken by such countries. We will continue to monitor market conditions and respond accordingly.
Basis of Presentation
The Unaudited Condensed Consolidated Financial Statements contained in this report have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP") and Securities and Exchange Commission ("SEC") guidance allowing for reduced disclosure for interim periods. In the opinion of management, the Unaudited Condensed Consolidated Financial Statements include all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods of the years ending December 31, 2025 and December 31, 2024.
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Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
Certain items included in these statements are based on management’s estimates. Actual results may differ from those estimates. The results of operations for any interim period are not necessarily indicative of the results expected for the year. The accompanying Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the notes to the Audited Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Annual Report").
Principles of Consolidation
Change in Accounting Principle
Certain amounts in prior periods have been reclassified to conform to the current year presentation. The impacts of the reclassifications are shown in the tables below. Any reclassifications not shown below did not have a material effect on the Company's financial condition or results of operations as previously reported.
Change in Classification of Certain Expenses from Selling, General and Administrative Expenses to Cost of Revenue
Beginning on January 1, 2025, the Company changed the presentation of certain costs on its Unaudited Condensed Consolidated Statements of Income (Loss), which include costs incurred at the Company's operational labs as well as the costs for certain personnel that indirectly support the Company’s delivery of services. This voluntary change in classification of certain overhead and personnel costs, which were determined to be directly related to the Company’s delivery of services, resulted in a decrease in Selling, general and administrative expenses and an offsetting increase in Cost of revenue. The Company believes this presentation is preferable as it will provide greater transparency regarding its Cost of revenue and better align with how the business is managed.
This change in classification has been applied retrospectively to all periods presented and affects Selling, general and administrative expenses; Cost of revenue; and Gross profit on the Company's Unaudited Condensed Consolidated Statements of Income (Loss). This change in presentation had no impact to Revenue, Income (loss) from operations, Income (loss) before provision (benefit) for income taxes, Provision (benefit) for income taxes, Net income (loss), Earnings (loss) per common share, or other components of equity, net assets or cash flows. In addition, Selling, general and administrative expenses and Other Expenses information disclosed in Note 14 Segment Disclosure was updated for this change. The impacts of the update to the presentation of certain indirect costs on the Company’s Condensed Consolidated Financial Statements for the three and six month periods ended June 30, 2024 are reflected below under the "Effect of change" columns .
| Three Months Ended June 30, 2024 | |||||||||||||||||
| As Previously Reported | Effect of change | As Adjusted | |||||||||||||||
| Cost of revenue | $ | $ | $ | ||||||||||||||
| Gross profit | ( | ||||||||||||||||
| Selling, general and administrative expenses | ( | ||||||||||||||||
| Six Months Ended June 30, 2024 | |||||||||||||||||
| As Previously Reported | Effect of change | As Adjusted | |||||||||||||||
| Cost of revenue | $ | $ | $ | ||||||||||||||
| Gross profit | ( | ||||||||||||||||
| Selling, general and administrative expenses | ( | ||||||||||||||||
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Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
Significant Accounting Policies
The Company’s significant accounting policies are disclosed in Note 1–Summary of Significant Accounting Policies and Practices in the 2024 Annual Report. On an ongoing basis, the Company evaluates its estimates and assumptions, including among other things, those related to revenue recognition, long-lived assets, goodwill and acquisitions. Since the date of the 2024 Annual Report, there have been no material changes to the Company’s significant accounting policies.
Income Taxes
Income taxes are accounted for under the asset and liability method. We recognize deferred tax assets and liabilities at enacted income tax rates for the temporary differences between the financial reporting bases and the tax bases of our assets and liabilities. Any effects of changes in income tax rates or tax laws are included in the provision for income taxes in the period of enactment. Our net deferred tax assets primarily consist of net operating loss carry forwards, or NOLs. A valuation allowance is provided if it is more likely than not that some or all of a deferred income tax asset will not be realized. A current tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the current and prior years.
As of June 30, 2025, management concluded that it is more likely than not that a substantial portion of the Company's deferred tax assets will be realized.
We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution.
The Company’s effective income tax rate was approximately 25.4 % and 15.5 % for the three months ended June 30, 2025 and 2024, respectively. The Company’s effective income tax rate was approximately 71.4 % and 14.9 % for the six months ended June 30, 2025 and 2024, respectively.
The effective income tax rate for the three months ended June 30, 2025, was higher than the statutory rate primarily due to the impact of a favorable discrete item related to stock compensation. The effective income tax rate for the three months ended June 30, 2024, was lower than the statutory rate primarily due to the impact of a favorable discrete item related to stock compensation.
The effective income tax rate for the six months ended June 30, 2025, was higher than the statutory rate primarily due to the impact of a favorable discrete item related to stock compensation. The effective income tax rate for the six months ended June 30, 2024, was lower than the statutory rate primarily due to the reversal of valuation allowances.
On July 4, 2025, H.R.1, commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), was enacted, which includes a broad range of tax reform provisions. We are currently evaluating the impact of the OBBBA.
Recent Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, Segment Reporting (Topic 280) to expand the disclosures about a public entity's reportable segments and address requests from investors for additional, more detailed information about a reportable segment's expenses. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We adopted the provisions of this ASU in the fourth quarter of 2024 and applied the provisions retrospectively to each period presented in the consolidated financial statements. Adoption of the new standard did not have a material impact on our condensed consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid disclosures. The new standard is effective for fiscal years beginning after December 15, 2024. We are currently evaluating the impacts this standard will have on our disclosures.
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Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
On November 4, 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures, to require disaggregation of certain expense captions into specified categories in disclosures within the notes of the financial statements. The standard is effective for fiscal years beginning after December 31, 2026 and early adoption is permitted. The guidance is required to be applied prospectively and amendments in the ASU may be applied prospectively or retrospectively. We are currently evaluating the impacts this standard will have on our disclosures.
On March 6, 2024, the SEC adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors, which will require registrants to provide certain climate-related information in their registration statements and periodic reports. The required disclosures will include, but are not limited to, specific disclosures about climate-related risks and their actual or likely material impacts on the registrant’s business, strategy, and outlook; the governance of climate-related risks and relevant risk management processes; Scope 1 and 2 greenhouse gas (GHG) emissions, if material or included in announced emission targets; certain climate-related financial statement metrics and related disclosures in a note to the audited financial statements; and information about climate-related targets and goals. The rules are effective on a rolling basis for various fiscal years, beginning for the Company with annual reports for the year ending December 31, 2025. However, in response to various legal challenges, the SEC voluntarily stayed the rules on April 4, 2024, which may impact the ultimate effective date of the rules. We will continue to monitor any developments on these rules and expected timing for compliance.
2. Revenue
The Company derives the majority of its revenue by providing services on a time and material basis, and are short-term in nature. The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers.
Performance Obligations
The Company provides highly integrated and bundled inspection services to its customers. The majority of the Company's contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and is, therefore, not distinct. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the Company's best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is a relative selling price based on price lists.
Contract modifications are not routine in the performance of the Company's contracts. Generally, when contracts are modified, the modification is to account for changes in scope to the goods and services that are provided. In most instances, contract modifications are for goods or services that are distinct, and, therefore, are accounted for as a separate contract.
The Company's performance obligations are satisfied over time as work progresses or at a point in time. The majority of the Company's revenue is recognized over time as work progresses for the Company's service deliverables, which includes providing testing, inspection and mechanical services to our customers. Revenue is recognized over time, based on time and material incurred to date which best portrays the transfer of control to the customer. The Company also utilizes an available practical expedient that provides for revenue to be recognized in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date. Fixed fee arrangements are determined based on expected labor, material, and overhead to be consumed on fulfillment of such services. For these arrangements, revenue is recognized on a cost-to-cost method tracked on an input basis.
The majority of our revenue recognized at a point in time is related to product sales when the customer obtains control of the asset, which is generally upon shipment to the customer. Contract costs include labor, material and overhead.
The Company expects any significant remaining performance obligations to be satisfied within one year .
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Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
Contract Estimates
The majority of the Company's revenues are short-term in nature. The Company enters into master service agreements ("MSA"s) with customers that specify an overall framework and contract terms. The actual contracting to provide services or furnish products are triggered by a work order, purchase order, or some similar document issued pursuant to a MSA which sets forth the scope of services and/or identifies the products to be provided. From time-to-time, the Company may enter into longer-term contracts, which can range from several months to several years. Revenue on certain contracts is recognized as work is performed based on total costs incurred to date in relation to the total estimated costs for the performance of the contract at completion. This includes contract estimates of costs to be incurred for the performance of the contract. Cost estimation is based upon the professional knowledge and experience of the Company's project managers, engineers and financial professionals. Factors that are considered in estimating the work to be completed include the availability of materials, the effect of any delays in the Company's project performance and the recoverability of any claims. Whenever revisions of estimates, contract costs and/or contract values indicate that the contract costs will exceed estimated revenues, thus creating a loss, a provision for the total estimated loss is recorded in that period.
Revenue by Category
The following series of tables present the Company's disaggregated revenue:
Revenue by industry was as follows:
| Three Months Ended June 30, 2025 | North America | International | Products & Systems | Corp/Elim | Total | ||||||||||||||||||||||||
| Oil & Gas | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Aerospace & Defense | |||||||||||||||||||||||||||||
| Industrials | |||||||||||||||||||||||||||||
| Power Generation & Transmission | |||||||||||||||||||||||||||||
| Other Process Industries | |||||||||||||||||||||||||||||
| Infrastructure, Research & Engineering | |||||||||||||||||||||||||||||
| Petrochemical | |||||||||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
| Three Months Ended June 30, 2024 | North America | International | Products & Systems | Corp/Elim | Total | ||||||||||||||||||||||||
| Oil & Gas | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Aerospace & Defense | |||||||||||||||||||||||||||||
| Industrials | |||||||||||||||||||||||||||||
| Power Generation & Transmission | |||||||||||||||||||||||||||||
| Other Process Industries | |||||||||||||||||||||||||||||
| Infrastructure, Research & Engineering | |||||||||||||||||||||||||||||
| Petrochemical | |||||||||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
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Table of Contents
Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
| Six Months Ended June 30, 2025 | North America | International | Products & Systems | Corp/Elim | Total | ||||||||||||||||||||||||
| Oil & Gas | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Aerospace & Defense | |||||||||||||||||||||||||||||
| Industrials | |||||||||||||||||||||||||||||
| Power Generation & Transmission | |||||||||||||||||||||||||||||
| Other Process Industries | |||||||||||||||||||||||||||||
| Infrastructure, Research & Engineering | |||||||||||||||||||||||||||||
| Petrochemical | |||||||||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
| Six Months Ended June 30, 2024 | North America | International | Products & Systems | Corp/Elim | Total | ||||||||||||||||||||||||
| Oil & Gas | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Aerospace & Defense | |||||||||||||||||||||||||||||
| Industrials | |||||||||||||||||||||||||||||
| Power Generation & Transmission | |||||||||||||||||||||||||||||
| Other Process Industries | |||||||||||||||||||||||||||||
| Infrastructure, Research & Engineering | |||||||||||||||||||||||||||||
| Petrochemical | |||||||||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Revenue per key geographic location was as follows:
| Three Months Ended June 30, 2025 | North America | International | Products & Systems | Corp/Elim | Total | ||||||||||||||||||||||||
| United States | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
| Other Americas | ( | ||||||||||||||||||||||||||||
| Europe | ( | ||||||||||||||||||||||||||||
| Asia-Pacific | ( | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
| Three Months Ended June 30, 2024 | North America | International | Products & Systems | Corp/Elim | Total | ||||||||||||||||||||||||
| United States | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
| Other Americas | ( | ||||||||||||||||||||||||||||
| Europe | ( | ||||||||||||||||||||||||||||
| Asia-Pacific | ( | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
| Six Months Ended June 30, 2025 | North America | International | Products & Systems | Corp/Elim | Total | ||||||||||||||||||||||||
| United States | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
| Other Americas | ( | ||||||||||||||||||||||||||||
| Europe | ( | ||||||||||||||||||||||||||||
| Asia-Pacific | ( | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
11
Table of Contents
Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
| Six Months Ended June 30, 2024 | North America | International | Products & Systems | Corp/Elim | Total | ||||||||||||||||||||||||
| United States | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
| Other Americas | ( | ||||||||||||||||||||||||||||
| Europe | ( | ||||||||||||||||||||||||||||
| Asia-Pacific | ( | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheets. Amounts are generally billed as work progresses in accordance with agreed-upon contractual terms, generally at periodic intervals (e.g., weekly, bi-weekly or monthly). Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, the Company sometimes receives advances or deposits from its customers before revenue is recognized, resulting in contract liabilities. These assets and liabilities are aggregated on an individual contract basis and reported on the Consolidated Balance Sheets at the end of each reporting period within accounts receivable, net or accrued expenses and other current liabilities.
3. Share-Based Compensation
The Company grants share-based incentive awards to its eligible employees and non-employee directors under its 2016 Long-Term Incentive Plan (the "2016 Plan"). Awards granted under the 2016 Plan may be in the form of stock options, restricted stock units and other forms of share-based incentives, including performance-based restricted stock units, stock appreciation rights and deferred stock rights. At the annual shareholders meeting on May 14, 2024, the Company’s shareholders approved an amendment to increase the total number of shares that may be issued under the 2016 Plan by 1.3 million, for a total of 6.2 million shares that are authorized for issuance under the 2016 Plan, of which approximately 823,000 shares were available for future grants as of June 30, 2025.
Stock Options
On December 31, 2024, the Compensation Committee (the "Compensation Committee") of the Company's Board of Directors approved the grant to Mr. Stamatakis, of a stock option for the purchase of 375,000 shares of the Company's common stock at an exercise price per share equal to the closing price of the common stock, as reported on the New York Stock Exchange (the "NYSE"), on the grant date of January 6, 2025 (the "Grant Date"). This stock option will vest and become exercisable on the first anniversary of the Grant Date, subject to accelerated vesting and exercisability upon termination of Mr. Stamatakis's employment due to his death or disability. In addition, if Mr. Stamatakis' employment ceases due to his termination by the Company without cause or his resignation with good reason, then pursuant to his employment agreement with the Company, the vesting and exercisability of this stock option will accelerate. The outside expiration date of this stock option is the tenth anniversary of the Grant Date.
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Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
The following table sets forth a summary of stock option activity, weighted-average exercise prices and options outstanding as of June 30, 2025 (in thousands, except per share amounts and years):
| Six Months Ended June 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Common Stock Options | Weighted Average Exercise Price | Common Stock Options | Weighted Average Exercise Price | ||||||||||||||||||||
| Outstanding at beginning of period: | $ | $ | |||||||||||||||||||||
| Granted | $ | $ | |||||||||||||||||||||
| Exercised | $ | $ | |||||||||||||||||||||
| Expired or forfeited | $ | $ | |||||||||||||||||||||
| Outstanding at end of period: | $ | $ | |||||||||||||||||||||
The Company recognized $1.0 million of share-based compensation expense within Reorganization and other costs during the six months ended June 30, 2025 related to the stock options that were granted in the first quarter of 2025. $1.0 million of share-based compensation expense related to stock options remains unrecognized as of the end of the current period, which is all expected to be recognized during 2025.
Stock Issuances to Non-Employee Directors
As part of its compensation program for non-employee directors, the Company issues fully-vested common stock to its non-employee directors. Prior to 2025, the shares of common stock were issued in semi-annual awards during the quarters ended March 31 and September 30. In 2025, non-employee directors received a single award during the quarter ended June 30, 2025. A summary of the fully-vested common stock the Company issued to its non-employee directors, in connection with its non-employee director compensation, is as follows (in thousands):
| Six months ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Awards issued | |||||||||||
| Grant date fair value of awards issued | $ | $ | |||||||||
Restricted Stock Unit Awards
For the three months ended June 30, 2025 and June 30, 2024, the Company recognized share-based compensation expense within Selling, general and administrative expenses related to restricted stock unit awards of $0.9 million and $1.3 million, respectively. For the six months ended June 30, 2025 and June 30, 2024, the Company recognized share-based compensation expense within Selling, general and administrative expenses related to restricted stock unit awards of $2.1 million and $2.3 million, respectively. For the three months ended June 30, 2025, the Company recognized share-based compensation expense within Reorganization and other costs related to restricted stock unit awards of $0.5 million. As of June 30, 2025, there was $7.1 million of unrecognized compensation costs related to restricted stock unit awards, which is expected to be recognized over a remaining weighted-average period of 2.6 years. Upon vesting, restricted stock units are generally net share-settled to cover the required withholding tax and the remaining amount is converted into an equivalent number of shares of common stock.
A summary of the vesting activity of restricted stock unit awards, with the respective fair value of the awards, is as follows:
| Six months ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Restricted stock awards vested | |||||||||||
| Fair value of awards vested | $ | $ | |||||||||
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Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
A summary of the Company's outstanding, non-vested restricted share units is as follows:
| Six months ended June 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Units | Weighted Average Grant-Date Fair Value | Units | Weighted Average Grant-Date Fair Value | ||||||||||||||||||||
| Outstanding at beginning of period: | $ | $ | |||||||||||||||||||||
| Granted | $ | $ | |||||||||||||||||||||
| Vested | ( | $ | ( | $ | |||||||||||||||||||
| Forfeited | ( | $ | ( | $ | |||||||||||||||||||
| Outstanding at end of period: | $ | $ | |||||||||||||||||||||
Performance Restricted Stock Units
The Company maintains Performance Restricted Stock Units ("PRSUs") that have been granted to select executives and senior officers, the ultimate payout of which may vary between zero and 200 % of the target award, based on the Company’s performance over a one-year period based on specific metrics approved by the Compensation Committee of the Board of Directors of the Company.
For 2024, the Compensation Committee used the following three performance metrics for PRSUs awarded in that year.
1.Free Cash Flow defined as net cash provided by operating activities less purchases of property, plant, equipment and intangible assets and is subject to adjustments approved by the Compensation Committee.
2.Adjusted EBITDA defined as net income attributable to the Company 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 and, if applicable, certain special items which are noted.
3.Revenue
For PRSUs awarded in 2025, the Compensation Committee utilized the same metrics as 2024 PRSUs, but with revised performance goals.
PRSUs are equity-classified and compensation costs related to PRSUs with performance conditions are initially measured using the fair value of the underlying stock at the date of grant. Compensation costs related to the PRSUs with performance conditions are subsequently adjusted for changes in the expected outcomes of the performance conditions. Compensation cost related to the PRSUs with a market condition is not reversed if the market condition is not achieved, provided the employee requisite service has been rendered. Earned PRSUs generally vest ratably in four equal annual installments over the four years following completion of the performance period, for a total requisite service period of up to five years , and have no dividend equivalent rights.
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Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
A summary of the Company's PRSU activity is as follows:
| Six months ended June 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Units | Weighted Average Grant-Date Fair Value | Units | Weighted Average Grant-Date Fair Value | ||||||||||||||||||||
| Outstanding at beginning of period: | $ | $ | |||||||||||||||||||||
| Granted | $ | $ | |||||||||||||||||||||
| Performance condition adjustments | ( | $ | $ | ||||||||||||||||||||
| Released | ( | $ | $ | ||||||||||||||||||||
| Forfeited | ( | $ | $ | ||||||||||||||||||||
| Outstanding at end of period: | $ | $ | |||||||||||||||||||||
For the three months ended June 30, 2025 and June 30, 2024, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $0.4 million and $0.3 million, respectively. For the six months ended June 30, 2025 and June 30, 2024, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $0.6 million and $0.3 million, respectively. At June 30, 2025, there was $3.9 million of total unrecognized compensation costs related to approximately 493,000 non-vested PRSUs, which is expected to be recognized over a remaining weighted-average period of 2.9 years.
4. Earnings (loss) per Share
Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, and (2) the dilutive effect of assumed conversion of equity awards using the treasury stock method. With respect to the number of weighted-average shares outstanding (denominator), diluted shares reflect: (i) the exercise of options to acquire common stock to the extent that the options’ exercise prices are less than the average market price of common shares during the period and (ii) the pro forma vesting of restricted stock units.
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Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
The following table sets forth the computations of basic and diluted earnings (loss) per share:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Basic earnings (loss) per share | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income (loss) attributable to Mistras Group, Inc. | $ | $ | $ | ( | $ | ||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Basic earnings (loss) per share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted earnings (loss) per share: | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income (loss) attributable to Mistras Group, Inc. | $ | $ | $ | ( | $ | ||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
Dilutive effect of stock options outstanding (1) | |||||||||||||||||||||||
Dilutive effect of restricted stock units outstanding (1) | |||||||||||||||||||||||
| Diluted earnings (loss) per share | $ | $ | $ | $ | |||||||||||||||||||
_______________
(1) For the three months ended June 30, 2025, 375,000 shares, related to stock options and 877,000 shares, related to restricted stock units were anti-dilutive and therefore were excluded from the calculation of diluted earnings (loss) per share. For the six months ended June 30, 2025, 106,000 shares, related to stock options and 867,000 shares, related to restricted stock units were excluded from the calculation of diluted earnings (loss) per share due to the net loss for the period.
5. Accounts Receivable, net
| June 30, 2025 | December 31, 2024 | ||||||||||
| Trade accounts receivable | $ | $ | |||||||||
| Allowance for credit losses | ( | ( | |||||||||
| Accounts receivable, net | $ | $ | |||||||||
The Company had $41.0 million and $21.3 million of unbilled revenue accrued as of June 30, 2025 and December 31, 2024, respectively. These amounts are included in the trade accounts receivable balances above. Unbilled revenue is generally billed in the subsequent quarter to their revenue recognition. The Company considers unbilled receivables as short-term in nature as they are normally converted to trade receivables within 90 days, thus future changes in economic conditions will not have a significant effect on the credit loss estimate.
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Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
6. Inventories
Inventories consist of the following (in thousands):
| June 30, 2025 | December 31, 2024 | ||||||||||
| Raw materials and consumable supplies | $ | $ | |||||||||
| Work in progress | |||||||||||
| Finished goods | |||||||||||
| Inventories | $ | $ | |||||||||
7. Property, Plant and Equipment, net
Property, plant and equipment, net consisted of the following:
Useful Life (Years) | June 30, 2025 | December 31, 2024 | |||||||||||||||
| Land | $ | $ | |||||||||||||||
| Buildings and improvements | |||||||||||||||||
| Office furniture and equipment | |||||||||||||||||
| Machinery and equipment | |||||||||||||||||
| Accumulated depreciation and amortization | ( | ( | |||||||||||||||
| Property, plant and equipment, net | $ | $ | |||||||||||||||
Depreciation expense for the three months ended June 30, 2025 and 2024 was approximately $6.1 million and $6.4 million, respectively.
Depreciation expense for the six months ended June 30, 2025 and 2024 was $12.1 million and $12.8 million, respectively.
8. Goodwill
Changes in the carrying amount of goodwill by segment is shown below:
| North America | International | Products and Systems | Total | ||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | |||||||||||||||||||
| Foreign currency translation | |||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | |||||||||||||||||||
The Company reviews goodwill for impairment on a reporting unit basis on October 1 of each year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.
The Company performed a quantitative annual impairment test as of October 1, 2024 and the Company did not identify any changes in circumstances that would indicate the carrying value of goodwill may not be recoverable. Additionally, through June 30, 2025, the Company did not identify any changes in circumstances that would indicate the carrying value of goodwill may not be recoverable. Significant adverse changes in future periods could negatively affect the Company's key assumptions and may result in future goodwill impairment charges which could be material.
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Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
9. Intangible Assets
The gross amount, accumulated amortization and net carrying amount of intangible assets were as follows:
| June 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Useful Life (Years) | Gross Amount | Accumulated Amortization | Net Carrying Amount | Gross Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
| Software/Technology | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Covenants not to compete | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
Amortization expense for the three months ended June 30, 2025 and 2024 was approximately $1.6 million and $1.9 million, respectively.
Amortization expense for the six months ended June 30, 2025 and 2024 was $3.4 million and $3.9 million, respectively.
10. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
| June 30, 2025 | December 31, 2024 | ||||||||||
| Accrued salaries, wages and related employee benefits | $ | $ | |||||||||
| Accrued workers’ compensation and health benefits | |||||||||||
| Deferred revenue | |||||||||||
| Pension accrual | |||||||||||
| Right-of-use liability - Operating | |||||||||||
| Other accrued expenses | |||||||||||
| Total | $ | $ | |||||||||
11. Long-Term Debt
Long-term debt consisted of the following:
| June 30, 2025 | December 31, 2024 | ||||||||||
| Senior credit facility | $ | $ | |||||||||
Senior secured term loan, net of unamortized debt issuance costs of $ | |||||||||||
| Other | |||||||||||
| Total debt | |||||||||||
| Less: Current portion | ( | ( | |||||||||
| Long-term debt, net of current portion | $ | $ | |||||||||
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Table of Contents
Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
Senior Credit Facility
On August 1, 2022, the Company entered into a credit agreement (the “Credit Agreement”), which provides the Company with a $190 million 5-year committed revolving credit facility and a $125 million term loan with a balance of $102.9 million as of June 30, 2025. The Credit Agreement permits the Company to borrow up to $100 million in non-U.S. dollar currencies and to use up to $20 million of the credit limit for the issuance of letters of credit. Both the revolving line of credit and the term loan under the Credit Agreement have a maturity date of July 30, 2027.
The Credit Agreement has the following key terms, conditions and financial covenants:
•Borrowings bear interest at Secured Overnight Financing Rate ("SOFR") plus a credit spread adjustment and applicable SOFR margin ranging from 1.25 % to 2.75 %, based upon our Total Consolidated Debt Leverage Ratio (defined below).
◦Total Consolidated Debt Leverage Ratio means the ratio of (a) Total Consolidated Debt to (b) EBITDA (as defined in the Credit Agreement) for the trailing four consecutive fiscal quarters.
◦Total Consolidated Debt means all indebtedness (including subordinated debt) of the Company on a consolidated basis.
•The Company has the benefit of the lowest SOFR margin if its Total Consolidated Debt Leverage Ratio is equal to or less than 1.25 to 1.0, and the margin increases as the ratio increases, to the maximum margin if the ratio is greater than 3.75 to 1.0. The Credit Agreement is secured by liens on substantially all the assets of the Company and certain of its U.S subsidiaries and is guaranteed by those U.S. subsidiaries.
•The Company is required to maintain a Total Consolidated Debt Leverage Ratio of no more than 4.0 to 1.0 at the end of each quarter through June 30, 2023 and stepping down to a maximum permitted ratio of no more than 3.75 to 1.0 for the remainder of the term.
•The Company is required to maintain a Fixed Charge Coverage Ratio of 1.25 to 1.0 for the duration of the Credit Agreement, as defined in the Credit Agreement.
•The Credit Agreement limits the Company’s ability to, among other things, create liens, make investments, incur more indebtedness, merge or consolidate, make dispositions of property, pay dividends, make distributions to stockholders or repurchase our stock, enter into a new line of business, enter into transactions with affiliates and enter into burdensome agreements.
•The Credit Agreement does not limit the Company’s ability to acquire other businesses or companies except that the acquired business or company must be in the Company's line of business, the Company must be in compliance with the financial covenants on a pro forma basis after taking into account the acquisition, and the Company must provide written notice at least five business days prior to the date of an acquisition of $10 million or more.
•Quarterly payments on the term loan of $1.56 million through June 30, 2024, then increasing to $2.34 million through June 30, 2025, and to $3.12 million for each quarterly payment thereafter through maturity.
As of June 30, 2025, the Company had borrowings of $187.2 million and a total of $3.1 million of letters of credit outstanding under the Credit Agreement. The Company has capitalized costs associated with debt modifications of $0.7 million as of June 30, 2025, which is included in Other Assets on the Unaudited Condensed Consolidated Balance Sheets and will be amortized into interest expense over the remaining term of the Credit Agreement through July 30, 2027.
As of June 30, 2025, the Company was in compliance with the terms and covenants of the Credit Agreement. The Company continuously monitors compliance with the covenants contained in the Credit Agreement. The Company believes that it is probable that the Company will be able to comply with the financial covenants in the Credit Agreement and that sufficient credit remains available under the Credit Agreement to meet the Company's liquidity needs. However, such matters cannot be predicted with certainty.
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Table of Contents
Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
Other debt
The Company's other debt includes bank financing provided at the local subsidiary level used to support working capital requirements and fund capital expenditures. At June 30, 2025, there was an aggregate of approximately $2.3 million outstanding, payable at various times through 2030. Monthly payments range from $0.7 thousand to $16.9 thousand and interest rates range from 0.4 % to 3.5 %.
12. Fair Value Measurements
The Company performs fair value measurements in accordance with the guidance provided by ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a three level hierarchy that prioritizes the inputs used to measure fair value.
Financial instruments not measured at fair value on a recurring basis
The Company has evaluated current market conditions and borrower credit quality and has determined that the carrying value of its long-term debt approximates fair value. The fair value of the Company’s notes payable and finance lease obligations approximates their carrying amounts based on anticipated interest rates which management believes would currently be available to the Company for similar issuances of debt.
13. Commitments and Contingencies
Legal Proceedings and Government Investigations
The Company is periodically involved in lawsuits, investigations and claims. While uncertainties exist with respect to the ultimate resolution of lawsuits, investigations and claims asserted against it, the Company, based on currently available information, does not believe that any currently pending or threatened legal proceeding to which the Company is a party, or is likely to become a party, including those proceedings identified in this Note 13, will have a material adverse effect on its business, results of operations, cash flows or financial condition. The costs incurred by the Company to defend lawsuits, investigations and claims and amounts the Company pays to other parties because of these matters may be covered by insurance in some circumstances.
Litigation and Commercial Claims
The Company and a subsidiary of the Company, Mistras Arizona Inspection Services LLC (“Mistras Arizona”), are subject to a lawsuit filed by the State of Arizona and the Arizona Department of Environmental Quality (collectively “DEQ”). The lawsuit, captioned State of Arizona v. Mistras Group, Inc., Mistras Arizona Inspection Services, LLC and Naiman Phoenix, Ltd., was originally filed on February 27, 2024, in the Superior Court of the State of Arizona for Maricopa County, CV 2024-003866 (the "DEQ Complaint"). The DEQ Complaint alleges various violations of Arizona environmental laws and regulations by the Company and Mistras Arizona in connection with the operation by Mistras Arizona of its testing facility in Phoenix, Arizona. The DEQ Complaint seeks, through injunctive relief, the closing of a chromic acid plating line at the testing facility, implementation of a site assessment plan approved by the DEQ, and corrective and remedial action to bring the testing facility into compliance with laws and regulations. In addition, the DEQ Complaint seeks unspecified penalties and costs.
The Superior Court held a hearing September 2024 regarding the DEQ’s request for a preliminary injunction. On October 23, 2024, the Superior Court issued a ruling, which declined to issue the preliminary injunction requested by the DEQ, but imposed the following conditions on the Company and Mistras Arizona unless and until modified by the Superior Court or entry of a final judgement: (1) the Company and Mistras Arizona are prohibited from releasing or permitting any release of chromic acid from the facility; (2) within a reasonable time, the Company and Mistras Arizona must complete improvements to the testing facility designed to prevent future discharges of chromium or chromic acid; (3) the Company must notify the DEQ upon completion of the improvement to enable the DEQ to conduct an inspection; and (4) the Company and Mistras Arizona are prohibited from engaging in any chrome plating operations at the testing facility until they notify the DEQ that the improvements have been completed. The DEQ may seek relief if it determines that the improvements are not sufficient to prevent discharges. In April 2025, Mistras Arizona notified the DEQ of its completed improvements, and the DEQ inspected the improvements. Following the DEQ site visit, Mistras Arizona commenced its chrome plating operations on April 28, 2025.
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Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
The Company intends to continue complying with the Superior Court's ruling. This matter is still in the relatively early stages, including as to factual and expert discovery. It is probable that remediation costs, fines and penalties may be imposed related to this lawsuit. However, the Company is unable to estimate the range of loss that it may incur.
In addition, Mistras Arizona’s operations in Phoenix are located at a leased site within the footprint of the Motorola 52nd Street Superfund Site (the “Motorola Site”). Mistras Arizona received a General Notice Letter from the US Environmental Protection Agency (the "EPA"), dated May 21, 2024, informing Mistras Arizona that the EPA has identified it as a potentially responsible party in relation to the Motorola Site. On April 29, 2025, the Company received a notice from the EPA requesting information regarding the improvements and other matters related to Phoenix testing facility. Mistras Arizona provided the EPA with the requested information in July 2025.
As it relates to this lawsuit, the recorded probable losses remain an estimate, and actual costs arising from this matter could materially differ depending on the actual costs incurred as well as the availability of additional insurance coverage.
Pension Related Contingencies
Certain of the Company’s subsidiaries had significant reductions in their unionized workers in 2018. The collective bargaining agreements for the employees of these subsidiaries required contributions for these employees to two national multi-employer pension funds. The reduction in employees resulted in one of the Company's subsidiaries incurring a complete withdrawal to one of the pension funds under the Employee Retirement Income Security Act of 1974 ("ERISA"), which was fully satisfied in 2019. The Company has determined that the subsidiary is likely to incur partial or complete withdrawal liability to the other pension fund. The balance of the estimated total amount of this potential liability as of June 30, 2025 is approximately $2.5 million, which were incurred in 2018 and 2019.
14. Segment Disclosure
The Company’s three operating segments, which are also the Company's reportable segments, are:
•North America: This segment provides asset protection solutions predominantly in North America, with the largest concentration in the United States, followed by Canada, consisting primarily of NDT, inspection, mechanical and engineering services that are used to evaluate the safety, structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components. Software, digital and data services are included in this segment.
•International: This segment offers services, products and systems similar to those of the other segments to select markets within Europe, the Middle East, Africa, Asia and South America, but not to customers in China and South Korea, which are served by the Products and Systems segment.
•Products and Systems: This segment designs, manufactures, sells, installs and services the Company’s asset protection products and systems, including equipment and instrumentation, predominantly in the United States.
Costs incurred for general corporate services, including finance, legal, and certain other costs that are provided to the segments are reported within Corporate and eliminations. Sales to the International segment from the Products and Systems segment and subsequent sales by the International segment of the same items are recorded and reflected in the operating performance of both segments. Additionally, engineering charges and royalty fees charged to the North America and International segments by the Products and Systems segment are reflected in the operating performance of each segment.
The chief operating decision maker ("CODM") reviews financial information at the operating segment level to allocate resources and to assess the operating results and financial performance for each operating segment. For the year ended December 31, 2024, our CODM was identified as Manny Stamatakis, the Interim Chief Executive Officer, because he has final authority over performance assessment and resource allocation decisions. Beginning January 1, 2025, our CODM was identified as Natalia Shuman, upon her appointment as our Chief Executive Officer effective January 1, 2025, as she has final authority over performance assessment and resource allocation decisions. Our segments are based on the type and concentration of customers served, service requirements, methods of distribution and major product lines.
21
Segment income (loss) from operations is the primary performance measure used by the CODM to evaluate segment performance and allocate resources, including considering budget-to-actual variances and prior year-to-actual variances on a monthly basis in accordance with GAAP under ASC 280, Segment Reporting. Segment income (loss) from operations for each of the Company's reportable segments are comprised of revenue, selling, general & administrative expenses, and "other expenses." "Other expenses" include cost of revenue, bad debt provision for troubled customers, goodwill impairment charges, reorganization and environmental costs, legal settlements and recoveries, acquisition-related expenses, depreciation and amortization and research and engineering.
Corporate and other assets are comprised principally of cash, deposits, property, plant and equipment, domestic deferred taxes, deferred charges and other assets. Corporate loss from operations consists of administrative charges related to corporate personnel and other charges that cannot be readily identified for allocation to a particular segment. These items of our operating profit are managed centrally at the corporate level and are excluded from the measure of segment income reviewed by the CODM, as well as the measure of segment performance used for incentive compensation purposes.
Selected consolidated financial information by segment for the periods shown was as follows. Income (loss) from operations by operating segment includes intercompany transactions, which are eliminated in Corporate and eliminations.
For the three months ended June 30, 2025
| Segment | |||||||||||||||||||||||||||||||||||
| North America | International | Products and Systems | Total Reportable Segments | Corporate and eliminations | Total | ||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
| Selling, general & administrative expenses | |||||||||||||||||||||||||||||||||||
| Other Expenses | ( | ||||||||||||||||||||||||||||||||||
| Income (loss) from operations | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
For the three months ended June 30, 2024
| Segment | |||||||||||||||||||||||||||||||||||
| North America | International | Products and Systems | Total Reportable Segments | Corporate and eliminations | Total | ||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
| Selling, general & administrative expenses | |||||||||||||||||||||||||||||||||||
| Other Expenses | ( | ||||||||||||||||||||||||||||||||||
| Income (loss) from operations | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
22
For the six months ended June 30, 2025
| Segment | |||||||||||||||||||||||||||||||||||
| North America | International | Products and Systems | Total Reportable Segments | Corporate and eliminations | Total | ||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
| Selling, general & administrative expenses | |||||||||||||||||||||||||||||||||||
| Other Expenses | ( | ||||||||||||||||||||||||||||||||||
| Income (loss) from operations | $ | $ | $ | $ | $ | ( | $ | 7,416 | |||||||||||||||||||||||||||
For the six months ended June 30, 2024
| Segment | |||||||||||||||||||||||||||||||||||
| North America | International | Products and Systems | Total Reportable Segments | Corporate and eliminations | Total | ||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
| Selling, general & administrative expenses | |||||||||||||||||||||||||||||||||||
| Other Expenses | ( | ||||||||||||||||||||||||||||||||||
| Income (loss) from operations | $ | $ | $ | $ | $ | ( | $ | 17,511 | |||||||||||||||||||||||||||
The tables above only reconcile to income (loss) from operations as our measure of segment profitability and the remainder of the reconciliation to net income (loss) can be seen on the Unaudited Condensed Consolidated Statement of Income (Loss). Products and Systems segment revenue was comprised of approximately $0.5 million and $1.0 million of sales to the International segment, which were eliminated upon consolidation, for the three months ended June 30, 2025 and June 30, 2024, respectively. Products and Systems segment revenue was comprised of approximately $1.5 million and $1.8 million of sales to the International segment, which were eliminated upon consolidation, for the six months ended June 30, 2025 and June 30, 2024, respectively. Intersegment revenue related to sales between other segments was immaterial for each of the three and six month periods ended June 30, 2025 and June 30, 2024.
Selected consolidated financial information by segment for the periods shown was as follows: (with intercompany transactions eliminated in Corporate and eliminations):
| June 30, 2025 | December 31, 2024 | ||||||||||
| Intangible assets, net | |||||||||||
| North America | $ | $ | |||||||||
| International | |||||||||||
| Products and Systems | |||||||||||
| Corporate and eliminations | |||||||||||
| $ | $ | ||||||||||
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| June 30, 2025 | December 31, 2024 | ||||||||||
| Total assets | |||||||||||
| North America | $ | $ | |||||||||
| International | |||||||||||
| Products and Systems | |||||||||||
| Corporate and eliminations | |||||||||||
| $ | $ | ||||||||||
| June 30, 2025 | December 31, 2024 | ||||||||||
| Long-lived assets | |||||||||||
| North America | $ | $ | |||||||||
| International | |||||||||||
| Products and Systems | |||||||||||
| Corporate and eliminations | |||||||||||
| $ | $ | ||||||||||
Refer to Note 2 - Revenue, for revenue by geographic area for the three and six months ended June 30, 2025 and 2024.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis (“MD&A”) provides a discussion of our results of operations and financial position for the three and six months ended June 30, 2025 and 2024. The MD&A should be read together with our Unaudited Condensed Consolidated Financial Statements and related notes included in Item 1 in this Quarterly Report on Form 10-Q (the "Quarterly Report") and our audited consolidated financial statements and related notes included in our 2024 Annual Report. Unless otherwise specified or the context otherwise requires, “Mistras,” “the Company,” “we,” “us” and “our” refer to Mistras Group, Inc. and its consolidated subsidiaries. The MD&A includes the following sections:
•Forward-Looking Statements
•Overview
•Note about Non-GAAP Measures
•Consolidated Results of Operations
•Liquidity and Capital Resources
•Critical Accounting Policies and Estimates
Forward-Looking Statements
This Quarterly Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 (“Exchange Act”). Such forward-looking statements include those that express plans, anticipation, intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact. These forward-looking statements are based on our current expectations and projections about future events and they are subject to risks and uncertainties known and unknown that could cause actual results and developments to differ materially from those expressed or implied in such statements.
In some cases, you can identify forward-looking statements by terminology, such as “goals,” or “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “could,” “should,” “would,” “predicts,” “appears,” “projects,” or the negative of such terms or other similar expressions. You are urged not to place undue reliance on any such forward-looking statements, any of which may turn out to be wrong due to inaccurate assumptions, various risks, uncertainties or other factors known and unknown. Factors that could cause or contribute to differences in results and outcomes from those in our forward-looking statements, including any impacts from the imposition of tariffs or other trade restrictions, changes to the
U.S. trade policy and impacts from the implementation of our new ERP (as defined below) system, include, without limitation, those discussed in the “Business—Forward-Looking Statements,” and “Risk Factors” sections of our 2024 Annual Report as well as those discussed in this Quarterly Report and in our other filings with the SEC. In addition, there are various developments discussed below which could create risks and uncertainty about our business, results of operations or liquidity.
Overview
We are 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 a decades-long legacy of industry leadership, the Company helps customers with asset-intensive infrastructure in the oil and gas, aerospace and defense, industrials, power generation and transmission (including alternative and renewable energy), other process industries and infrastructure, research and engineering and other 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; building real-time monitoring equipment to enable safe travel across bridges; and helping to propel sustainability, the Company helps the world at large.
The Company enhances value for its clients by integrating asset protection throughout supply chains and centralizing integrity data through a suite of Industrial Internet of Things ("IoT")-connected digital software and monitoring solutions, including OneSuite™, which serves as an ecosystem platform, pulling together all of the Company’s software and data services capabilities, for the benefit of its customers.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)
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.
Our operations consist of three reportable segments: North America, International, and Products and Systems.
•North America provides asset protection solutions predominantly in North America, with the largest concentration in the United States, followed by Canada, consisting primarily of NDT, inspection, mechanical and engineering services that are used to evaluate the safety, structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components. Software, digital and data services are included in this segment.
•International offers services, products and systems similar to those of the other segments to select markets within Europe, the Middle East, Africa, Asia and South America, but not to customers in China and South Korea, which are served by the Products and Systems segment.
•Products and Systems designs, manufactures, sells, installs and services the Company’s asset protection products and systems, including equipment and instrumentation, predominantly in the United States.
Given the role our solutions play in enhancing the safe and efficient operation of infrastructure, we have historically provided a majority of our solutions to our customers on a regular, recurring basis. We perform these services largely at our customers’ facilities, while primarily servicing our aerospace customers at our network of state-of-the-art, in-house laboratories. These solutions typically include NDT and inspection services, and can also include a wide range of mechanical services, including heat tracing, pre-inspection insulation stripping, coating applications, re-insulation, engineering assessments and long-term condition-monitoring. Under this business model, many customers outsource their inspection to us on a “run and maintain” basis. We have established long-term relationships as a critical solutions provider to many of the leading companies with asset-intensive infrastructure in our target markets. These markets include companies in the oil and gas, aerospace and defense, industrials, power generation and transmission (including alternative and renewable energy), other process industries and infrastructure, research and engineering and other industries.
We have focused on providing our advanced asset protection solutions to our customers using proprietary, technology-enabled software and testing instruments, including those developed by our Products and Systems segment. We have made numerous acquisitions in the past in an effort to grow our base of experienced, certified personnel, expand our service lines and technical capabilities, increase our geographical reach, complement our existing offerings, and leverage our fixed costs. We have increased our capabilities and the size of our customer base through the development of applied technologies and managed support services, organic growth and the integration of acquired companies. These acquisitions have provided us with additional service lines, technologies, resources and customers which we believe enhance our advantages over our competition.
We believe long-term growth can be realized in our target markets. Our level of business and financial results are impacted by world-wide macro- and micro-economic conditions generally, as well as those within our target markets. Among other things, we expect the timing of our oil and gas customers inspection spend to be impacted by oil price fluctuations.
We have continued providing our customers with an innovative asset protection software ecosystem through our OneSuite platform. The software platform offers functions of our software and services brands as integrated apps on a cloud environment. OneSuite serves as a single access portal for customers' data activities and provides access to 90 plus applications being offered on one centralized platform.
Recent Developments
Our cash position and liquidity remains strong. As of June 30, 2025, our cash balance was approximately $20.0 million and, with our Credit Agreement, provides us with significant liquidity.
As discussed above in Note 1 - Description of Business and Basis of Presentation, we changed the presentation of certain costs incurred at our operational labs as well as for certain lab personnel on our Unaudited Condensed Consolidated Statements of Income (Loss). This voluntary change in classification of certain overhead and personnel costs, which were determined to be directly related to the delivery of our services, resulted in a decrease in from Selling, general and administrative expenses and
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Mistras Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)
an offsetting increase in Cost of revenue. We believe this presentation is preferable as it will provide greater transparency regarding our cost of revenue and better align with how our business is managed.
The Company is currently unable to predict with certainty the overall impact of continuing inflationary pressures or increased costs due to the imposition of tariffs and other trade barriers or changes to U.S. trade policy may have on its business, results of operations or liquidity or in other ways which the Company cannot yet determine. The Company’s European operations are currently experiencing higher energy costs, among other increased costs, due in part to the on-going war between Russia and Ukraine and the conflicts in the Middle East between Israel and Hamas and between Israel and Iran. The Company will continue to monitor market conditions and respond accordingly.
Note About Non-GAAP Measures
The Company prepares its consolidated financial statements in accordance with GAAP. In this MD&A under the heading "Income (loss) from Operations", the non-GAAP financial performance measure "Income (loss) from operations before special items” is used for each of our three operating segments, the Corporate segment and the "Total Company", with tables reconciling the measure to a financial measure under GAAP. This presentation excludes from "Income (loss) from Operations" (a) transaction expenses related to acquisitions, such as professional fees and due diligence costs, (b) the net changes in the fair value of acquisition-related contingent consideration liabilities, (c) impairment charges, (d) reorganization and other costs, which includes items such as severance, labor relations matters and asset and lease termination costs and (e) other special items. These adjustments have been excluded from the GAAP measure because these expenses and credits are not related to our or any individual segment's core business operations. The acquisition related costs and special items can be a net expense or credit in any given period. Our management uses this non-GAAP measure as a measure of operating performance and liquidity to assist in comparing performance from period to period on a consistent basis, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations. We believe investors and other users of our financial statements benefit from the presentation of this non-GAAP measure in evaluating our performance. Income (loss) before special items excludes the identified adjustments, which provides additional tools to compare our core business operating performance on a consistent basis and measure underlying trends and results in our business. Income (loss) before special items is not used to determine incentive compensation for executives or employees, nor is it a replacement for the reported GAAP financial performance and/or necessarily comparable to the non-GAAP financial measures of other companies. Any measure that eliminates the foregoing items has material limitations as a performance or liquidity measure and should not be considered alternatives to net income (loss) or any other measures derived in accordance with GAAP. Because Income (loss) from operations before special items may not be calculated in the same manner by all companies, this measure may not be comparable to other similarly titled measures used by other companies.
Results of Operations
Condensed consolidated results of operations for the three and six months ended June 30, 2025 and 2024 were as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||
| Revenue | $ | 185,405 | $ | 189,773 | $ | 347,020 | $ | 374,215 | ||||||||||||||||||||||||
| Gross profit | 53,945 | 51,340 | 94,837 | 97,492 | ||||||||||||||||||||||||||||
| Gross profit as a % of Revenue | 29.1 | % | 27.1 | % | 27.3 | % | 26.1 | % | ||||||||||||||||||||||||
| Income from operations | 8,428 | 11,959 | 7,416 | 17,511 | ||||||||||||||||||||||||||||
| Income from operations as a % of Revenue | 4.5 | % | 6.3 | % | 2.1 | % | 4.7 | % | ||||||||||||||||||||||||
| Income (loss) before provision (benefit) for income taxes | 4,189 | 7,546 | (147) | 8,669 | ||||||||||||||||||||||||||||
| Net income (loss) | 3,126 | 6,373 | (42) | 7,377 | ||||||||||||||||||||||||||||
| Net income (loss) attributable to Mistras Group, Inc. | $ | 3,017 | $ | 6,369 | $ | (169) | $ | 7,364 | ||||||||||||||||||||||||
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Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)
Revenue
Revenue was $185.4 million for the three months ended June 30, 2025, a decrease of $4.4 million, or 2.3%, compared with the three months ended June 30, 2024.
Revenue by segment for the three and six months ended June 30, 2025 and 2024 were as follows:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| North America | $ | 147,992 | $ | 156,394 | $ | 276,894 | $ | 306,743 | |||||||||||||||
| International | 39,077 | 34,264 | 72,291 | 67,311 | |||||||||||||||||||
| Products and Systems | 2,740 | 3,373 | 5,831 | 6,583 | |||||||||||||||||||
| Corporate and eliminations | (4,404) | (4,258) | (7,996) | (6,422) | |||||||||||||||||||
| Total | $ | 185,405 | $ | 189,773 | $ | 347,020 | $ | 374,215 | |||||||||||||||
Three Months
In the three months ended June 30, 2025, total revenue decreased 2.3% versus the prior year comparable period due predominantly to a low single-digit organic decrease driven by voluntary laboratory consolidations. North America segment revenue decreased 5.4%, driven predominantly by a decrease in our Oil and Gas market revenue and declines in demand in other key markets due to macroeconomic factors such as uncertainties driven by continuing inflationary pressures and increased costs due to the imposition of tariffs. International segment revenue increased 14.0%, due predominantly to high single-digit organic growth and mid-single-digit favorable impact of foreign exchange rates. Products and Systems segment revenue decreased by 18.8%, due to decreased sales volume and shipments as compared to the prior year comparable period.
Oil and gas customer revenue comprised approximately 55% and 58% of total revenue for the three months ended June 30, 2025 and 2024, respectively. Aerospace and defense customer revenue comprised approximately 13% and 12% of total revenue for the three months ended June 30, 2025 and 2024, respectively. The Company’s top ten customers comprised approximately 35% of total revenue for the three months ended June 30, 2025, as compared to 35% for the three months ended June 30, 2024, with no customer accounting for 10% or more of total revenue in either three-month period.
Six Months
In the six months ended June 30, 2025, total revenue decreased 7.3% versus the prior year comparable period due predominantly to a high single-digit organic decrease. North America segment revenue decreased 9.7%, driven predominantly by a decrease in our Oil and Gas market revenue and declines in demand in other key markets due to macroeconomic factors such as uncertainties driven by continuing inflationary pressures and increased costs due to the imposition of tariffs. International segment revenue increased 7.4%, due predominantly to mid-single-digit organic growth and low single-digit favorable impact of foreign exchange rates. Products and Systems segment revenue decreased by 11.4%, due to decreased sales volume and shipments as compared to the prior year comparable period.
Oil and gas customer revenue comprised approximately 57% and 59% of total revenue for the six months ended June 30, 2025 and 2024, respectively. Aerospace and defense customer revenue comprised approximately 13% and 12% of total revenue for the six months ended June 30, 2025 and 2024, respectively. The Company’s top ten customers comprised approximately 37% of total revenue for the six months ended June 30, 2025, as compared to 35% for the six months ended June 30, 2024, with no customer accounting for 10% or more of total revenue in either six-month period.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)
The Company has retrospectively reclassified certain Oil and Gas sub-category revenues for each quarterly period in 2024 and the first quarter of 2025 in order to conform the classification with the current period presentation. Total Oil and Gas sub-category revenues were unchanged in total in each quarterly period and for the full year ended December 31, 2024 and for the quarter ended March 31, 2025. The table below presents the reclassified balances for each quarterly period in the prior year and the first quarter of 2025.
| 2024 Quarterly Revenues | |||||||||||||||||||||||
| Three months ended March 31, | Three months ended June 30, | Three months ended September 30, | Three months ended December 31, | ||||||||||||||||||||
| Oil and Gas Revenue by sub-category | |||||||||||||||||||||||
| Upstream | $ | 39,514 | $ | 41,013 | $ | 40,756 | $ | 36,753 | |||||||||||||||
| Midstream | 18,533 | 20,786 | 20,790 | 20,033 | |||||||||||||||||||
| Downstream | 55,118 | 47,457 | 37,957 | 40,212 | |||||||||||||||||||
| Total | $ | 113,165 | $ | 109,256 | $ | 99,503 | $ | 96,998 | |||||||||||||||
| 2025 Quarterly Revenues | |||||
| Three months ended March 31, | |||||
| Oil and Gas Revenue by sub-category | |||||
| Upstream | $ | 36,820 | |||
| Midstream | 15,341 | ||||
| Downstream | 44,403 | ||||
| Total | $ | 96,564 | |||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Oil and Gas Revenue by sub-category | |||||||||||||||||||||||
| Upstream | $ | 38,180 | $ | 41,013 | $ | 75,000 | $ | 80,527 | |||||||||||||||
| Midstream | 18,575 | 20,786 | 33,916 | 39,319 | |||||||||||||||||||
| Downstream | 46,061 | 47,457 | 90,464 | 102,575 | |||||||||||||||||||
| Total | $ | 102,816 | $ | 109,256 | $ | 199,380 | $ | 222,421 | |||||||||||||||
Oil and gas upstream customer revenue decreased approximately $5.5 million, or 7%, for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, and $2.8 million, or 7%, for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, due primarily to market share losses and decreased exploration activity as compared to the prior year comparable period.
Midstream customer revenues decreased approximately $5.4 million, or 14%, for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, and $2.2 million, or 11%, for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, due to decreased pipe inspection services as compared to the prior year comparable period.
Downstream customer revenue decreased $12.1 million, or 12%, for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, and $1.4 million, or 3%, for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, primarily due to decreased customer turnarounds in the current year that were delayed in the prior year comparable period.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenue by type | |||||||||||||||||||||||
| Field Services | $ | 123,484 | $ | 134,528 | $ | 233,659 | $ | 260,883 | |||||||||||||||
| Shop Laboratories | 15,682 | 16,938 | 30,711 | 34,133 | |||||||||||||||||||
| Data Analytical Solutions | 18,330 | 18,342 | 32,311 | 33,881 | |||||||||||||||||||
| Other | 27,909 | 19,965 | 50,339 | 45,318 | |||||||||||||||||||
| Total | $ | 185,405 | $ | 189,773 | $ | 347,020 | $ | 374,215 | |||||||||||||||
In presenting the allocation of revenue by type in the table above, management makes certain assumptions in its allocation of revenue from laboratories that provide more than one type of service. The allocation methodology and assumptions made are consistent for the years presented.
Field Services revenue is comprised of revenue derived primarily by technicians performing asset inspections and maintenance services for our customers at locations other than Mistras properties. Field Services revenue decreased by $11.0 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 and decreased by $27.2 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to decreases in sales volume in our oil and gas, industrials and infrastructure, research and engineering end markets within our North America segment and oil and gas end market within our International segment.
Shop Laboratory revenue is comprised of quality assurance inspections of components and materials at our Mistras in-house laboratory facilities. Shop Laboratory revenue decreased by $1.3 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 and decreased by $3.4 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to decreased sales volumes in our aerospace and defense end market in our North America and International segments.
Data Analytical Solutions revenue is comprised of revenue derived from data software sales & subscriptions, implementation services and analytics which offer insights and generate value from asset protection. Data Analytical Solutions revenue is derived from work performed by our employees in our facilities, or at customer locations. Data Analytical Solutions revenue remained flat for the three months ended June 30, 2025 as compared to the prior year comparable period. Data Analytical Solutions revenue decreased by $1.6 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to decreased sales volume within PCMS and other Data Analytical Solutions offerings within our North America segment.
Other revenue is comprised of locations that perform both asset inspection services and testing of components and materials at in-house Mistras laboratories. Other revenue increased by $7.9 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 and increased by $5.0 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to increased sales within the defense sector within the North America segment.
Gross Profit
Gross profit, which reflects the reclassification of certain overhead and personnel costs from selling, general and administrative
expenses to cost of revenue (see Note 1 - Description of Business and Basis of Presentation), increased by $2.6 million, or 5.1%, in the three months ended June 30, 2025 versus the prior year comparable period primarily due to an improved business mix and operating efficiencies.
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Mistras Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)
Gross profit by segment for the three and six months ended June 30, 2025 and 2024 was as follows:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
Gross profit (1) | |||||||||||||||||||||||
| North America | $ | 40,384 | $ | 39,874 | $ | 70,549 | $ | 75,250 | |||||||||||||||
| % of segment revenue | 27.3 | % | 25.5 | % | 25.5 | % | 24.5 | % | |||||||||||||||
| International | 12,270 | 9,890 | 21,358 | 19,157 | |||||||||||||||||||
| % of segment revenue | 31.4 | % | 28.9 | % | 29.5 | % | 28.5 | % | |||||||||||||||
| Products and Systems | 1,337 | 1,555 | 2,960 | 3,036 | |||||||||||||||||||
| % of segment revenue | 48.8 | % | 46.1 | % | 50.8 | % | 46.1 | % | |||||||||||||||
| Corporate and eliminations | (46) | 21 | (30) | 49 | |||||||||||||||||||
| $ | 53,945 | $ | 51,340 | $ | 94,837 | $ | 97,492 | ||||||||||||||||
| % of total revenue | 29.1 | % | 27.1 | % | 27.3 | % | 26.1 | % | |||||||||||||||
(1) As noted in Note 1, the Company changed the presentation of certain costs incurred at its operational labs as well as the costs for certain personnel that indirectly support the Company’s delivery of services on its Consolidated Statements of Income (Loss). This voluntary change in classification of certain overhead and employee costs, which, were determined to be directly related to the Company’s delivery of services, resulted in a decrease in Selling, general and administrative expenses and an offsetting increase in Cost of revenue. The impact on gross profit of this change in classification for the year ended December 31, 2024 was approximately $20.9 million.
Three Months
Gross profit margin was 29.1% and 27.1% for the three-month periods ended June 30, 2025 and 2024, respectively. Gross profit margin for the North America segment increased by 1.8% during the three months ended June 30, 2025 as compared to the prior year comparable period primarily due to an improved business mix and operating efficiencies. International segment realized a 2.5% increase in gross profit margin to 31.4% during the three months ended June 30, 2025 as compared to the prior year comparable period primarily due to a favorable sales mix in the current year period. Products and Systems segment gross margin had an increase of 2.7% in gross profit margin to 48.8% during the three months ended June 30, 2025 primarily due to a favorable sales mix as compared to the prior period.
Six Months
Gross profit margin was 27.3% and 26.1% for the six-month periods ended June 30, 2025 and 2024, respectively. Gross profit margin for the North America segment realized a 1.0% increase in gross profit margin to 25.5% during the six months ended June 30, 2025 as compared to the prior year comparable period primarily due to a favorable sales mix and operating efficiencies. International segment realized a 1.0% increase in gross profit margin to 29.5% during the six months ended June 30, 2025 as compared to the prior year comparable period primarily due to a favorable sales mix. Products and Systems segment gross margin had an increase of 4.7% in gross profit margin to 50.8% during the six months ended June 30, 2025 primarily due to a favorable sales mix as compared to the prior period.
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Mistras Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)
Operating Expenses
Operating expenses for the three and six months ended June 30, 2025 and 2024 was as follows:
| Three months ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||
| ($ in thousands) | ||||||||||||||||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | $ | 39,793 | $ | 36,181 | $ | 75,445 | $ | 72,431 | ||||||||||||||||||||||||
| Reorganization and other costs | 2,951 | 518 | 6,038 | 2,076 | ||||||||||||||||||||||||||||
| Environmental expense | 518 | — | 1,058 | — | ||||||||||||||||||||||||||||
| Legal settlement and insurance recoveries, net | — | 60 | — | 60 | ||||||||||||||||||||||||||||
| Research and engineering | 269 | 231 | 568 | 575 | ||||||||||||||||||||||||||||
| Depreciation and amortization | 1,986 | 2,391 | 4,312 | 4,839 | ||||||||||||||||||||||||||||
| $ | 45,517 | $ | 39,381 | $ | 87,421 | $ | 79,981 | |||||||||||||||||||||||||
| % of total revenue | 24.6 | % | 20.8 | % | 25.2 | % | 21.4 | % | ||||||||||||||||||||||||
Three Months
Operating expenses increased $6.1 million, or 15.6%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Selling, general and administrative expenses increased $3.6 million during the three months ended June 30, 2025 compared to the three months ended June 30, 2024, due to adverse foreign exchange impact, partially offset by ongoing cost containment activities. As discussed in Note 1 - Description of Business and Basis of Presentation, Selling, general and administrative expenses reflect the classification change for certain overhead and personnel costs from Selling, general and administrative expenses to Cost of revenue. Environmental expense increased by $0.5 million as compared to the prior year comparable period due to environmental costs incurred during the three months ended June 30, 2025, which were not incurred during the prior year comparable period. Reorganization and other costs increased by $2.4 million to $3.0 million as compared to the prior year comparable period due to continued calibration of the Company’s headcount and other related costs. Depreciation and amortization decreased $0.4 million during the three months ended June 30, 2025 compared to the three months ended June 30, 2024.
Six Months
Operating expenses increased $7.4 million, or 9%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Selling, general and administrative expenses increased $3.0 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024, due to an unfavorable foreign exchange impact as compared to the prior year comparable period, partially offset by continued cost discipline and our focus on the calibration of our overhead costs relative to revenue achieved. As discussed in Note 1 - Description of Business and Basis of Presentation, Selling, general and administrative expenses reflect the classification change for certain overhead and personnel costs from Selling, general and administrative expenses to Cost of revenue. Environmental expense increased by $1.1 million as compared to the prior year comparable period due to environmental costs incurred during the six months ended June 30, 2025, which were not incurred during the prior year comparable period. Reorganization and other costs increased by $4.0 million to $6.0 million as compared to the prior year comparable period due to continued calibration of the Company’s headcount and other related costs. Depreciation and amortization decreased by $0.5 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024.
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Mistras Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)
Income (loss) from Operations
The following table shows a reconciliation of the income from operations to income (loss) from operations before special items for each of our three segments, Corporate and Elimination and for the Company in total:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| ($ in thousands) | ($ in thousands) | ||||||||||||||||||||||
| North America: | |||||||||||||||||||||||
| Income from operations (GAAP) | $ | 16,758 | $ | 18,727 | $ | 23,273 | $ | 32,287 | |||||||||||||||
| Reorganization and other costs | 1,113 | 92 | 2,471 | 92 | |||||||||||||||||||
| Legal settlement and insurance recoveries, net | — | 60 | — | 60 | |||||||||||||||||||
| Income from operations before special items (non-GAAP) | $ | 17,871 | $ | 18,879 | $ | 25,744 | $ | 32,439 | |||||||||||||||
| International: | |||||||||||||||||||||||
| Income from operations (GAAP) | $ | 4,004 | $ | 1,647 | $ | 5,085 | $ | 2,771 | |||||||||||||||
| Reorganization and other costs | 92 | 161 | 270 | 263 | |||||||||||||||||||
| Income from operations before special items (non-GAAP) | $ | 4,096 | $ | 1,808 | $ | 5,355 | $ | 3,034 | |||||||||||||||
| Products and Systems: | |||||||||||||||||||||||
| Income from operations (GAAP) | $ | 336 | $ | 495 | $ | 663 | $ | 809 | |||||||||||||||
| Reorganization and other costs | — | — | 151 | 2 | |||||||||||||||||||
| Income from operations before special items (non-GAAP) | $ | 336 | $ | 495 | $ | 814 | $ | 811 | |||||||||||||||
| Corporate and Eliminations: | |||||||||||||||||||||||
| Loss from operations (GAAP) | $ | (12,670) | $ | (8,910) | $ | (21,605) | $ | (18,356) | |||||||||||||||
| Environmental expense | 518 | — | 1,058 | — | |||||||||||||||||||
| Reorganization and other costs | 1,746 | 265 | 3,146 | 1,719 | |||||||||||||||||||
| Loss from operations before special items (non-GAAP) | $ | (10,406) | $ | (8,645) | $ | (17,401) | $ | (16,637) | |||||||||||||||
| Total Company: | |||||||||||||||||||||||
| Income from operations (GAAP) | $ | 8,428 | $ | 11,959 | $ | 7,416 | $ | 17,511 | |||||||||||||||
| Environmental expense | 518 | — | 1,058 | — | |||||||||||||||||||
| Reorganization and other costs | 2,951 | 518 | 6,038 | 2,076 | |||||||||||||||||||
| Legal settlement and insurance recoveries, net | — | 60 | — | 60 | |||||||||||||||||||
| Income from operations before special items (non-GAAP) | $ | 11,897 | $ | 12,537 | $ | 14,512 | $ | 19,647 | |||||||||||||||
See section Note About Non-GAAP Measures in this Quarterly Report for an explanation of the use of non-GAAP measurements.
Three Months
For the three months ended June 30, 2025, income from operations (GAAP) decreased $3.5 million or 29.5%, compared with the three months ended June 30, 2024, while income from operations before special items (non-GAAP) decreased by $0.6 million, or 5.1%. As a percentage of revenue, income from operations before special items decreased by 20 basis points to 6.4% in the three months ended June 30, 2025 compared to 6.6% in the three months ended June 30, 2024.
Six Months
For the six months ended June 30, 2025, income from operations (GAAP) decreased $10.1 million or 58%, compared with the six months ended June 30, 2024, while income from operations before special items (non-GAAP) decreased by $5.1 million, or 26%. As a percentage of revenue, income from operations before special items decreased by 110 basis points to 4.2% in the six months ended June 30, 2025 compared to 5.3% in the six months ended June 30, 2024.
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Mistras Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)
Interest Expense
Interest expense was approximately $4.2 million and $4.4 million for the three months ended June 30, 2025 and 2024, respectively. This decrease of $0.2 million in interest expense was a result of lower debt balances during the three months ended June 30, 2025 in comparison to the prior year comparable period. Interest expense was approximately $7.6 million and $8.8 million for the six months ended June 30, 2025 and 2024, respectively. This decrease of $1.2 million in interest expense was a result of lower debt balances during the six months ended June 30, 2025 in comparison to the prior year comparable period.
Income Taxes
Our effective income tax rate was approximately 25.4% and 15.5% for the three months ended June 30, 2025 and 2024, respectively. Our effective income tax rate was approximately 71.4% and 14.9% for the six months ended June 30, 2025 and 2024, respectively.
The effective income tax rate for the three months ended June 30, 2025, was higher than the statutory rate primarily due to the impact of a favorable discrete item related to stock compensation. The effective income tax rate for the three months ended June 30, 2024 was lower than the statutory rate primarily due to the impact of a favorable discrete item related to stock compensation.
The effective income tax rate for the six months ended June 30, 2025, was higher than the statutory rate primarily due to the impact of a favorable discrete item related to stock compensation. The effective income tax rate for the six months ended June 30, 2024, was lower than the statutory rate primarily due to the reversal of valuation allowances.
Income tax expense varies as a function of pre-tax income and the level of non-deductible expenses, such as certain amounts of meals and entertainment expense, valuation allowances, and other permanent differences. It is also affected by discrete items that may occur in any given year but are not consistent from year to year. Our effective income tax rate may fluctuate over the next few years due to many variables including the amount and future geographic distribution of our pre-tax income, changes resulting from our acquisition strategy, and increases or decreases in our permanent differences.
On July 4, 2025, H.R.1, commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), was enacted, which includes a broad range of tax reform provisions. We are currently evaluating the impact of the OBBBA.
Liquidity and Capital Resources
Cash flows are summarized in the table below:
Six months ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net cash (used in) provided by: | |||||||||||
| Operating activities | $ | (3,619) | $ | 5,115 | |||||||
| Investing activities | (11,416) | (11,217) | |||||||||
| Financing activities | 14,910 | 5,261 | |||||||||
| Effect of exchange rate changes on cash | 1,765 | 372 | |||||||||
| Net change in cash and cash equivalents | $ | 1,640 | $ | (469) | |||||||
Cash Flows from Operating Activities
During the six months ended June 30, 2025, cash used in operating activities was $3.6 million, representing a year-on-year decrease of $8.7 million, or 171%. This decrease was primarily attributable to an increase in days sales outstanding and movements in working capital, as compared to the prior year comparable period. Specifically, during the second quarter of 2025, we had a buildup in unbilled accounts receivable and a delay in invoicing related to our conversion to a new enterprise resource planning (“ERP”) system effective as of April 1, 2025. Although unbilled and billed accounts receivable balances
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Table of Contents
Mistras Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)
increased during the period ended June 30, 2025 related to the ERP implementation, we expect a reduction in these balances over the remainder of the year.
Cash Flows from Investing Activities
During the six months ended June 30, 2025, cash used in investing activities was $11.4 million, representing a $0.2 million increase compared to the prior year comparable period, primarily attributable to increased expenditures for property, plant, and equipment.
Cash Flows from Financing Activities
Net cash provided by financing activities was $14.9 million for the six months ended June 30, 2025, compared to net cash provided by financing activities of $5.3 million for the six months ended June 30, 2024. During the six months ended June 30, 2025, net borrowings of debt were approximately $9.8 million higher than compared to the prior year comparable period resulting in net debt borrowings during the period. The increase in net cash provided by financing activities is partially offset by $0.2 million more in taxes paid related to net share settlement of share-based awards during the six months ended June 30, 2025.
Effect of Exchange Rate Changes on Cash and Cash Equivalents
The effect of exchange rate changes on our cash and cash equivalents was an increase of $1.8 million in the six months ended June 30, 2025, compared to an increase of $0.4 million for the six months ended June 30, 2024.
Cash Balance and Credit Facility Borrowings
As of June 30, 2025, we had cash and cash equivalents totaling $20.0 million and $102.6 million of unused commitments under our Credit Agreement with borrowings of $187.2 million and $3.1 million of letters of credit outstanding. We finance operations primarily through our existing cash balances, cash collected from operations, bank borrowings and capital lease financing. We believe these sources are sufficient to fund our operations for the foreseeable future.
As of June 30, 2025, we were in compliance with the terms of the Credit Agreement and will continuously monitor our compliance with the covenants contained in the Credit Agreement.
The terms of our Credit Agreement are described in Note 11 - Long-Term Debt of the Notes to the Unaudited Condensed Consolidated Financial Statements, under the heading "Senior Credit Facility".
Contractual Obligations
There have been no significant changes in our contractual obligations and outstanding indebtedness as disclosed in the 2024 Annual Report.
Off-balance Sheet Arrangements
During the six months ended June 30, 2025, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
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Critical Accounting Policies and Estimates
There have been no significant changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the 2024 Annual Report.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no significant changes to our quantitative and qualitative disclosures about market risk as discussed in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk,” included in the 2024 Annual Report.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Pursuant to Rule 13a-15(b) under the Exchange Act, our management carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and our Senior Executive Vice President, Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls (as defined in Rule 13a-15(e) of the Exchange Act) and procedures. Based upon that evaluation, our President and Chief Executive Officer and our Senior Executive Vice President, Chief Financial Officer concluded that, as of June 30, 2025, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Table of Contents
PART II—OTHER INFORMATION
ITEM 1. Legal Proceedings
See Note 13 - Commitments and Contingencies to the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for a description of our legal proceedings. There have been no material legal proceedings and no material developments with regard to any matters disclosed under Part I, Item 3 "Legal Proceedings" in our 2024 Annual Report, except as disclosed herein under Note 13 - Commitments and Contingencies to the Notes to the Unaudited Condensed Consolidated Financial Statements.
ITEM 1.A. Risk Factors
In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors discussed under the “Risk Factors” section included in our 2024 Annual Report. There have been no material changes to the risk factors previously disclosed in the 2024 Annual Report.
ITEM 2. Unregistered Sale of Equity Securities and Use of Proceeds
(a) Sales of Unregistered Securities
None.
(b) Use of Proceeds from Public Offering of Common Stock
None.
(c) Repurchases of Our Equity Securities
The following table sets forth the shares of our common stock we acquired during the quarter as a result of the surrender of shares by employees to satisfy tax withholding obligations in connection with the vesting or settlement of restricted stock units.
| Month Ending | Total Number of Shares (or Units) Purchased | Average Price Paid per Share (or Unit) | ||||||||||||||||||||||||
| April 30, 2025 | — | $ | — | |||||||||||||||||||||||
| May 31, 2025 | 1,800 | $ | 7.44 | |||||||||||||||||||||||
| June 30, 2025 | — | $ | — | |||||||||||||||||||||||
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
Not applicable.
ITEM 5. Other Information
Rule 10b5-1 Trading Plans
During the three and six months ended June 30, 2025, none of the Company's directors or officers, as defined in Section 16 of the Securities Exchange Act of 1934, adopted terminated
During the three and six months ended June 30, 2025, the Company did not adopt, terminate or modify a Rule 10b5-1
trading arrangement.
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Table of Contents
ITEM 6. Exhibits
| Exhibit No. | Description | |||||||
31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. | |||||||
31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. | |||||||
32.1 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 101.INS | Inline XBRL Instance Document | |||||||
| 101.SCH | Inline XBRL Schema Document | |||||||
| 101.CAL | Inline XBRL Calculation Linkbase Document | |||||||
| 101.LAB | Inline XBRL Labels Linkbase Document | |||||||
| 101.PRE | Inline XBRL Presentation Linkbase Document | |||||||
| 101.DEF | Inline XBRL Definition Linkbase Document | |||||||
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Table of Contents
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| MISTRAS GROUP, INC. | ||||||||
| By: | /s/ Edward J. Prajzner | |||||||
| Edward J. Prajzner | ||||||||
| Senior Executive Vice President and Chief Financial Officer | ||||||||
| (Principal Financial and Accounting Officer and duly authorized officer) | ||||||||
Date: August 11, 2025
39
Source:
FAQ
What were Mistras (MG) revenues for Q2 2025 and how did they compare to Q2 2024?
Revenue was $185.4 million in Q2 2025, down from $189.8 million in Q2 2024, a 2.3% decrease.
Did Mistras (MG) report a profit for the six months ended June 30, 2025?
No. For the six months ended June 30, 2025 the company reported a $42 thousand net loss versus net income of $7.377 million in the prior year.
How much cash and total debt did Mistras (MG) have at June 30, 2025?
Cash and cash equivalents were $19.957 million and total debt was $189.414 million at June 30, 2025.
What segment drove growth and which segments declined in Q2 2025 for MG?
The International segment grew 14.0% year-over-year; North America declined (driven by Oil & Gas weakness) and Products & Systems decreased ~18.8%.
Is Mistras (MG) compliant with its credit facility covenants?
Yes. The company states it was in compliance with its Credit Agreement covenants as of June 30, 2025 and believes it can meet liquidity needs.
Are there any legal or environmental risks disclosed by MG?
Yes. The company faces a DEQ lawsuit related to its Phoenix testing facility and received EPA inquiries; remediation costs and penalties are considered probable but not yet estimable.
Mistras
NYSE:MG
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Aug 6, 2025
[8-K] Mistras Group Inc. Reports Material Event
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[SCHEDULE 13G] Mistras Group Inc. SEC Filing
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Security & Protection Services
Services-engineering Services
United States
PRINCETON JUNCTION