updated 1/11/2011 4:17:23 PM ET 2011-01-11T21:17:23

PRINCETON JUNCTION, N.J., Jan. 11, 2011 (GLOBE NEWSWIRE) -- Mistras Group, Inc. (NYSE:MG), a leading "one source" global provider of technology enabled asset protection solutions, today reported financial results for its fiscal second quarter ending November 30, 2010. Revenue for the second quarter of fiscal 2011 was $88.8 million, an increase of $16.9 million or 24%, compared to the $71.9 million in revenues reported for the second quarter of fiscal 2010. Adjusted EBITDA*, a non-GAAP measure detailed later in this release, grew by 30% to $15.9 million in the second quarter of fiscal 2011 versus $12.3 million in the second quarter of fiscal 2010. Net income for the second quarter of fiscal 2011 grew by 59% to $5.7 million, or $0.21 per diluted share, versus $3.6 million, or $0.14 per diluted share, in the second quarter of fiscal 2010.

Financial Highlights

  • Continued a trend of double digit revenue growth resulting in a Compounded Annual Growth Rate (CAGR) in revenues of 27% over the last five fiscal years.
  • Revenues grew by 23% in the first six months of fiscal 2011 to $157.2 million, up from $128.0 million in the first six months of fiscal 2010.
  • Adjusted EBITDA* grew by 27% in the first six months of fiscal 2011 to $24.4 million, versus $19.3 million in the first six months of fiscal 2010.
  • Adjusted EBITDA* as a percentage of revenue increased 80 basis points to approximately 18% in the second quarter of fiscal 2011.
  • Net income grew by 66% in the first six months of fiscal 2011 to $7.3 million, up from $4.4 million in 2010.
  • The Company generated $11.1 million in net cash from operating activities in the first six months of fiscal 2011, versus $8.6 million in the first six months of fiscal 2010, representing an increase of 29%.

Revenue growth of 24% in the fiscal second quarter was driven by organic growth of 18%, acquisition growth of 6%, and was only minimally impacted by movements in foreign currency. During the second quarter of fiscal 2011, the Company achieved revenue growth across all of its segments, including gains of 25% in the Services segment, 10% in the Products and Systems segment and 25% in the International segment.

Net income during the second quarter of 2011 included an increase in our legal provision of $0.1 million. In addition, net income for the second quarter of 2011 included $1.0 million in stock compensation expense, compared to $0.8 million in the second quarter of 2010. Both of these expense classifications are included in the calculation of Adjusted EBITDA*. The company believes Adjusted EBITDA* is a key measure of operating performance for its business segments.

Chairman and Chief Executive Officer, Dr. Sotirios J. Vahaviolos stated that, "Our second quarter results continue the trend of double digit growth in Revenues and Adjusted EBITDA* that we have consistently delivered for several years now. Our second quarter growth was especially impressive given the strong performance in the second quarter of fiscal 2010, when both revenues and Adjusted EBITDA* also grew significantly. Once again, organic growth led the way, contributing to the bulk of our revenue growth. In addition, we are pleased to have increased our Adjusted EBITDA* as a percentage of revenues, which reflects our continued focus on profitable growth and leveraging our strengthening market share position."

Business Outlook for Fiscal 2011:

The Company is forecasting continued double digit growth in Revenues and Adjusted EBITDA* for fiscal 2011. In addition, the Company is raising its previously issued guidance range for fiscal 2011 revenue and Adjusted EBITDA* and now projects revenues to be in the range of $310 million to $340 million (up from $300 million to $330 million) and Adjusted EBITDA* to be in the range of $45 million to $50 million (up from $44 million to $49 million). Mistras does not provide specific guidance for individual quarters, but will reaffirm or update our annual guidance at least quarterly.

Conference Call to Discuss Second Quarter Fiscal 2011 Results

Mistras will have a conference call on Wednesday, January 12th, 2011 at 9:00 am Eastern Time to discuss its results for the second quarter of fiscal year 2011. The call will be broadcast over the Web and can be accessed on Mistras' Website, www.mistrasgroup.com. Individuals in the U.S. wishing to participate in the conference call by phone may call (866) 314-4483 and use confirmation code 38815568 when prompted. The International number is (617) 213-8049. Those who wish to listen to the call later can access an archived copy of the conference call at the Mistras Website.

About Mistras Group, Inc.

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

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

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

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

Forward-Looking and Cautionary Statements

Certain statements made in this press release are "forward-looking statements" about Mistras' financial results and estimates, products and services, business model, strategy, growth opportunities, profitability and competitive position. These forward-looking statements generally use words such as "future," "possible," "potential," "targeted," "anticipate," "believe," "estimate," "expect," "intend," "plan," "predict," "project," "will," "may," "should," "could," "would" and other similar words and phrases. Such statements are not guarantees of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved, if at all. These statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in these statements. A list, description and discussion of these risks and uncertainties can be found in the "Risk Factors" section of the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on August 17, 2010.The forward-looking statements are made as of the date hereof, and Mistras undertakes no obligation to update such statements as a result of new information, future events or otherwise.

* Use of Non-GAAP Measures

The term "Adjusted EBITDA" is a financial measurement not calculated in accordance with U.S. generally accepted accounting principles. The Company believes that investors and other users of the financial statements benefit from the presentation of Adjusted EBITDA because it provides an additional metric to compare the Company's operating performance on a consistent basis and measure underlying trends and results of the Company's business. An explanation of Adjusted EBITDA and a reconciliation of this to a financial measurement under GAAP are set forth in a table attached to this press release.

Mistras Group, Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except share data)
     
  November 30, 2010 May 31, 2010
 ASSETS     
 Current Assets     
 Cash and cash equivalents   $ 6,769  $ 16,037
 Accounts receivable, net   63,354  54,721
 Inventories, net   10,181  8,736
 Deferred income taxes   2,287  2,189
 Prepaid expenses and other current assets   5,791  5,292
Total current assets  88,382  86,975
Property, plant and equipment, net  46,396  39,981
Intangible assets, net  20,290  16,088
Goodwill  51,586  44,315
Other assets  454  1,273
Total assets  $ 207,108  $ 188,632
     
LIABILITIES, PREFERRED STOCK AND EQUITY    
Current liabilities    
Current portion of long-term debt  $ 5,563  $ 6,303
Current portion of capital lease obligations  5,854  5,370
Accounts payable  4,594  4,640
Accrued expenses and other current liabilities  22,585  20,090
Income taxes payable  3,504  3,281
Total current liabilities  42,100  39,684
Long-term debt, net of current portion  12,269  5,691
Obligations under capital leases, net of current portion  9,477  9,199
Deferred income taxes  2,325  2,087
Other long-term liabilities  636  1,417
Total liabilities  66,807  58,078
     
Commitments and contingencies    
Preferred stock, 10,000,000 shares authorized  --   -- 
Equity     
Common stock, $0.01 par value, 200,000,000 shares authorized, 26,664,855 and 26,663,528

shares issued and outstanding as of November 30, 2010 and May 31, 2010, respectively
 267  267
Additional paid-in capital  163,830  162,054
Accumulated deficit  (23,178)  (30,448)
Accumulated other comprehensive loss  (1,021)  (1,587)
Total Mistras Group, Inc. stockholders' equity  139,898  130,286
Noncontrolling interest  403  268
Total equity  140,301  130,554
Total liabilities, preferred stock and equity  $ 207,108  $ 188,632
Mistras Group, Inc.
Unaudited Consolidated Statement of Operations
(in thousands, except per share data)
         
   Three months ended November 30,  Six months ended November 30,
  2010 2009 2010 2009
Revenues:        
Services  $ 82,953  $ 66,862  $ 144,205  $ 118,518
Products  5,884  5,037  13,042  9,470
Total revenues  88,837  71,899  157,247  127,988
Cost of Revenues:        
Cost of services  55,667  44,506  97,058  78,875
Cost of goods sold  2,067  1,742  5,344  3,841
Depreciation of services  3,136  2,435  5,945  4,715
Depreciation of products  159  200  314  391
Total cost of revenues  61,029  48,883  108,661  87,822
Gross profit  27,808  23,016  48,586  40,166
Selling, general and administrative expenses  15,615  13,686  31,094  26,819
Research and engineering  569  449  1,124  932
Depreciation and amortization  1,326  1,214  2,504  2,259
Legal reserve  101  --   351  (297)
Income from operations  10,197  7,667  13,513  10,453
Other expenses        
Interest expense  671  1,017  1,361  2,081
Loss on extinguishment of long-term debt  --   218  --   387
Income before provision for income taxes

 and noncontrolling interest
 9,526  6,432  12,152  7,985
Provision for income taxes  3,818  2,875  4,872  3,569
Net income  5,708  3,557  7,280  4,416
Net (income) loss attributable to noncontrolling

 interests, net of taxes
 (30)  5  (10)  (39)
Net income attributable to Mistras Group, Inc.  5,678  3,562  7,270  4,377
Accretion of preferred stock  --   6,499  --   6,499
Net income attributable to common shareholders  $ 5,678  $ 10,061  $ 7,270  $ 10,876
Earnings per common share:        
Basic  $ 0.21  $ 0.48  $ 0.27  $ 0.64
Diluted  $ 0.21  $ 0.14  $ 0.27  $ 0.19
Weighted average common shares outstanding:        
Basic  26,665 20,987  26,664 16,971
Diluted  26,816 24,993  26,795 22,980
Mistras Group, Inc.
Unaudited Operating Data by Segment
(in thousands)
         
         
   Three months ended November 30,   Six months ended November 30, 
  2010 2009 2010 2009
         
 Revenues         
 Services   $ 76,108  $ 60,938  $ 131,390  $ 106,640
 Products and Systems   5,228  4,744  10,538  8,369
 International   9,350  7,479  18,390  15,230
 Corporate and eliminations   (1,849)  (1,262)  (3,071)  (2,251)
   $ 88,837  $ 71,899  $ 157,247  $ 127,988
         
   Three months ended November 30,   Six months ended November 30, 
  2010 2009 2010 2009
         
 Gross profit         
 Services   $ 21,753  $ 17,405  $ 36,754  $ 29,933
 Products and Systems   2,821  2,818  5,390  4,506
 International   3,260  2,944  6,531  5,990
 Corporate and eliminations   (26)  (151)  (89)  (263)
   $ 27,808  $ 23,016  $ 48,586  $ 40,166
Mistras Group, Inc.
Unaudited Reconciliation of

Net Income Attributable to Mistras Group, Inc. to EBITDA and Adjusted EBITDA
(in thousands)
         
   Three months ended November 30,   Six months ended November 30, 
  2010 2009 2010 2009
 EBITDA and Adjusted EBITDA data         
Net income attributable to Mistras Group, Inc.  $ 5,678  $ 3,562  $ 7,270  $ 4,377
Interest expense   671  1,017  1,361  2,081
Provision for income taxes   3,818  2,875  4,872  3,569
Depreciation and amortization   4,621  3,849  8,763  7,365
EBITDA   $ 14,788  $ 11,303  $ 22,266  $ 17,392
Legal reserve  101  --   351  (297)
Large customer bankruptcy   --   --   --   767
Stock compensation expense   1,047  783  1,776  1,033
Loss on extinguishment of debt   --   218  --   387
Adjusted EBITDA   $ 15,936  $ 12,304  $ 24,393  $ 19,282

"Adjusted EBITDA" is defined as net income attributable to Mistras Group, Inc. plus: interest expense, provision for income taxes, depreciation and amortization, stock-based compensation expense, certain acquisition related costs and certain one-time and generally non-recurring items (which are included in the reconciliation above).

CONTACT:  Frank Joyce, Chief Financial Officer
          609-716-4103

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