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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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22-3341267
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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195 Clarksville Road
Princeton Junction, New Jersey
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08550
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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PAGE
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(unaudited)
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August 31, 2016
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May 31, 2016
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||||
ASSETS
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Current Assets
|
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Cash and cash equivalents
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$
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14,940
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$
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21,188
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Accounts receivable, net
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134,138
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137,913
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Inventories
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10,049
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9,918
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Deferred income taxes
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6,096
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6,216
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Prepaid expenses and other current assets
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12,491
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12,711
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Total current assets
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177,714
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187,946
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Property, plant and equipment, net
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76,662
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78,676
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Intangible assets, net
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41,513
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43,492
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Goodwill
|
169,195
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169,220
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Deferred income taxes
|
975
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1,000
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Other assets
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2,222
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2,341
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Total assets
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$
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468,281
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$
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482,675
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LIABILITIES AND EQUITY
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Current Liabilities
|
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Accounts payable
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$
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8,669
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$
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10,796
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Accrued expenses and other current liabilities
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60,747
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62,983
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Current portion of long-term debt
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2,089
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12,553
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Current portion of capital lease obligations
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7,041
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7,835
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Income taxes payable
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2,472
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2,710
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Total current liabilities
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81,018
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96,877
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Long-term debt, net of current portion
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68,341
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72,456
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Obligations under capital leases, net of current portion
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11,349
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11,932
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|
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Deferred income taxes
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19,442
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18,328
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Other long-term liabilities
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7,136
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6,794
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Total liabilities
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187,286
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206,387
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Commitments and contingencies
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Equity
|
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Preferred stock, 10,000,000 shares authorized
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—
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—
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Common stock, $0.01 par value, 200,000,000 shares authorized
|
291
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290
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Additional paid-in capital
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215,420
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213,737
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Retained earnings
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88,832
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82,235
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Accumulated other comprehensive loss
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(23,682
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)
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(20,099
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)
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Total Mistras Group, Inc. stockholders’ equity
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280,861
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276,163
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Noncontrolling interests
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134
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125
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Total equity
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280,995
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276,288
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Total liabilities and equity
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$
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468,281
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$
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482,675
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Three months ended
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||||||
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August 31, 2016
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August 31, 2015
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Revenue
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$
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168,443
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$
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179,853
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Cost of revenue
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112,981
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123,400
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Depreciation
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5,406
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5,179
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Gross profit
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50,056
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51,274
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Selling, general and administrative expenses
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35,278
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35,836
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Research and engineering
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632
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621
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Depreciation and amortization
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2,597
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2,781
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Acquisition-related expense (benefit), net
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394
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(896
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)
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Income from operations
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11,155
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12,932
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Interest expense
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820
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1,922
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Income before provision for income taxes
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10,335
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11,010
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Provision for income taxes
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3,726
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4,163
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Net income
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6,609
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6,847
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Less: net income (loss) attributable to noncontrolling interests, net of taxes
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13
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(25
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)
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Net income attributable to Mistras Group, Inc.
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$
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6,596
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$
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6,872
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Earnings per common share
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Basic
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$
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0.23
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$
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0.24
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Diluted
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$
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0.22
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$
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0.23
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Weighted average common shares outstanding:
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Basic
|
28,976
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28,724
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Diluted
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30,210
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29,595
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Three months ended
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August 31, 2016
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August 31, 2015
|
||||
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Net income
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$
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6,609
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$
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6,847
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Other comprehensive loss:
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Foreign currency translation adjustments
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(3,583
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)
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(652
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)
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Comprehensive income
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3,026
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6,195
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Less: comprehensive loss attributable to noncontrolling interest
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(4
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)
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(88
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)
|
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Comprehensive income attributable to Mistras Group, Inc.
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$
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3,030
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$
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6,283
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Three months ended
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||||||
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August 31, 2016
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August 31, 2015
|
||||
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Cash flows from operating activities
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|
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Net income
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$
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6,609
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$
|
6,847
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Adjustments to reconcile net income to net cash provided by operating activities
|
|
|
|
|
|
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Depreciation and amortization
|
8,003
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|
|
7,960
|
|
||
Deferred income taxes
|
1,238
|
|
|
1,474
|
|
||
Share-based compensation expense
|
1,906
|
|
|
1,957
|
|
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Fair value changes in contingent consideration liabilities
|
356
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(900
|
)
|
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Other
|
(746
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)
|
|
(784
|
)
|
||
Changes in operating assets and liabilities, net of effect of acquisitions:
|
|
|
|
|
|
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Accounts receivable
|
3,180
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|
|
(1,760
|
)
|
||
Inventories
|
(53
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)
|
|
(16
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)
|
||
Prepaid expenses and other current assets
|
76
|
|
|
2,036
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|
||
Other assets
|
118
|
|
|
(108
|
)
|
||
Accounts payable
|
(2,009
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)
|
|
(393
|
)
|
||
Accrued expenses and other liabilities
|
(1,174
|
)
|
|
(112
|
)
|
||
Income taxes payable
|
(160
|
)
|
|
9
|
|
||
Net cash provided by operating activities
|
17,344
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|
|
16,210
|
|
||
Cash flows from investing activities
|
|
|
|
|
|
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Purchase of property, plant and equipment
|
(3,729
|
)
|
|
(4,501
|
)
|
||
Purchase of intangible assets
|
(288
|
)
|
|
(66
|
)
|
||
Acquisition of businesses, net of cash acquired
|
(1,188
|
)
|
|
—
|
|
||
Proceeds from sale of equipment
|
230
|
|
|
168
|
|
||
Net cash used in investing activities
|
(4,975
|
)
|
|
(4,399
|
)
|
||
Cash flows from financing activities
|
|
|
|
|
|
||
Repayment of capital lease obligations
|
(1,986
|
)
|
|
(1,893
|
)
|
||
Proceeds from borrowings of long-term debt
|
113
|
|
|
1,382
|
|
||
Repayment of long-term debt
|
(10,647
|
)
|
|
(12,347
|
)
|
||
Proceeds from revolver
|
18,900
|
|
|
20,100
|
|
||
Repayments of revolver
|
(23,100
|
)
|
|
(16,400
|
)
|
||
Payment of contingent consideration for acquisitions
|
(792
|
)
|
|
(113
|
)
|
||
Taxes paid related to net share settlement of share-based awards
|
(1,274
|
)
|
|
(953
|
)
|
||
Excess tax benefit from share-based compensation
|
501
|
|
|
(338
|
)
|
||
Proceeds from exercise of stock options
|
438
|
|
|
—
|
|
||
Net cash used in financing activities
|
(17,847
|
)
|
|
(10,562
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(770
|
)
|
|
(118
|
)
|
||
Net change in cash and cash equivalents
|
(6,248
|
)
|
|
1,131
|
|
||
Cash and cash equivalents
|
|
|
|
|
|
||
Beginning of period
|
21,188
|
|
|
10,555
|
|
||
End of period
|
$
|
14,940
|
|
|
$
|
11,686
|
|
Supplemental disclosure of cash paid
|
|
|
|
|
|
||
Interest
|
$
|
1,085
|
|
|
$
|
1,803
|
|
Income taxes
|
$
|
1,900
|
|
|
$
|
192
|
|
Noncash investing and financing
|
|
|
|
|
|
||
Equipment acquired through capital lease obligations
|
$
|
1,142
|
|
|
$
|
636
|
|
Issuance of notes payable for acquisitions
|
$
|
331
|
|
|
$
|
—
|
|
|
For the three months ended August 31,
|
|
||||||||||||
|
2016
|
|
2015
|
|
||||||||||
|
Common
Stock
Options
|
|
Weighted
Average
Exercise
Price
|
|
Common
Stock
Options
|
|
Weighted
Average
Exercise
Price
|
|
||||||
Outstanding at beginning of period:
|
2,232
|
|
|
$
|
13.21
|
|
|
2,287
|
|
|
$
|
13.13
|
|
|
Granted
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Exercised
|
(44
|
)
|
|
$
|
9.89
|
|
|
—
|
|
|
$
|
—
|
|
|
Expired or forfeited
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Outstanding at end of period:
|
2,188
|
|
|
$
|
13.28
|
|
|
2,287
|
|
|
$
|
13.13
|
|
|
|
For the three months ended August 31,
|
||||||||||||
|
2016
|
|
2015
|
||||||||||
|
Units
|
|
Weighted
Average Grant-Date Fair Value |
|
Units
|
|
Weighted
Average Grant-Date Fair Value |
||||||
Outstanding at beginning of period:
|
575
|
|
|
$
|
18.85
|
|
|
564
|
|
|
$
|
20.47
|
|
Granted
|
217
|
|
|
$
|
24.51
|
|
|
174
|
|
|
$
|
15.51
|
|
Released
|
(175
|
)
|
|
$
|
19.49
|
|
|
(205
|
)
|
|
$
|
20.38
|
|
Forfeited
|
(5
|
)
|
|
$
|
20.31
|
|
|
(6
|
)
|
|
$
|
20.36
|
|
Outstanding at end of period:
|
612
|
|
|
$
|
20.67
|
|
|
527
|
|
|
$
|
18.87
|
|
|
For the three months ended August 31, 2016
|
|
|||||
|
Units
|
|
Weighted
Average Grant-Date Fair Value |
|
|||
Outstanding at beginning of period:
|
328
|
|
|
$
|
17.02
|
|
|
Granted
|
105
|
|
|
$
|
24.90
|
|
|
Performance condition adjustments
|
19
|
|
|
$
|
22.91
|
|
|
Released
|
—
|
|
|
$
|
—
|
|
|
Forfeited
|
—
|
|
|
$
|
—
|
|
|
Outstanding at end of period:
|
452
|
|
|
$
|
20.67
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
Three months ended
|
||||||
|
August 31, 2016
|
|
August 31, 2015
|
||||
|
|
|
|
||||
Basic earnings per share
|
|
|
|
|
|
||
Numerator:
|
|
|
|
|
|
||
Net income attributable to Mistras Group, Inc.
|
$
|
6,596
|
|
|
$
|
6,872
|
|
Denominator:
|
|
|
|
|
|
||
Weighted average common shares outstanding
|
28,976
|
|
|
28,724
|
|
||
Basic earnings per share
|
$
|
0.23
|
|
|
$
|
0.24
|
|
|
|
|
|
||||
Diluted earnings per share:
|
|
|
|
|
|
||
Numerator:
|
|
|
|
|
|
||
Net income attributable to Mistras Group, Inc.
|
$
|
6,596
|
|
|
$
|
6,872
|
|
Denominator:
|
|
|
|
|
|
||
Weighted average common shares outstanding
|
28,976
|
|
|
28,724
|
|
||
Dilutive effect of stock options outstanding
|
827
|
|
|
627
|
|
||
Dilutive effect of restricted stock units outstanding
|
407
|
|
|
244
|
|
||
|
30,210
|
|
|
29,595
|
|
||
Diluted earnings per share
|
$
|
0.22
|
|
|
$
|
0.23
|
|
|
Fiscal
|
||
|
2017
|
||
Number of Entities
|
2
|
|
|
Consideration transferred:
|
|
||
Cash paid
|
$
|
1,196
|
|
Notes payable
|
332
|
|
|
Contingent consideration
|
364
|
|
|
Consideration transferred
|
$
|
1,892
|
|
|
|
||
Current assets
|
$
|
673
|
|
Property, plant and equipment
|
133
|
|
|
Intangible assets
|
397
|
|
|
Goodwill
|
1,024
|
|
|
Current liabilities
|
(219
|
)
|
|
Long-term deferred tax liability
|
(116
|
)
|
|
Net assets acquired
|
$
|
1,892
|
|
|
August 31, 2016
|
|
May 31, 2016
|
||||
|
|
|
|
||||
Trade accounts receivable
|
$
|
136,952
|
|
|
$
|
140,820
|
|
Allowance for doubtful accounts
|
(2,814
|
)
|
|
(2,907
|
)
|
||
Accounts receivable, net
|
$
|
134,138
|
|
|
$
|
137,913
|
|
|
Useful Life
(Years)
|
|
August 31, 2016
|
|
May 31, 2016
|
||||
|
|
|
|
|
|
||||
Land
|
|
|
$
|
1,728
|
|
|
$
|
1,735
|
|
Buildings and improvements
|
30-40
|
|
19,434
|
|
|
19,364
|
|
||
Office furniture and equipment
|
5-8
|
|
8,780
|
|
|
8,692
|
|
||
Machinery and equipment
|
5-7
|
|
174,821
|
|
|
173,053
|
|
||
|
|
|
204,763
|
|
|
202,844
|
|
||
Accumulated depreciation and amortization
|
|
|
(128,101
|
)
|
|
(124,168
|
)
|
||
Property, plant and equipment, net
|
|
|
$
|
76,662
|
|
|
$
|
78,676
|
|
|
Services
|
|
International
|
|
Products and Systems
|
|
Total
|
||||||||
Balance at May 31, 2015
|
$
|
117,279
|
|
|
$
|
35,938
|
|
|
$
|
13,197
|
|
|
$
|
166,414
|
|
Goodwill acquired (disposed) during the year
|
2,728
|
|
|
(374
|
)
|
|
—
|
|
|
2,354
|
|
||||
Adjustments to preliminary purchase price allocations
|
270
|
|
|
—
|
|
|
—
|
|
|
270
|
|
||||
Foreign currency translation
|
(594
|
)
|
|
776
|
|
|
—
|
|
|
182
|
|
||||
Balance at May 31, 2016
|
$
|
119,683
|
|
|
$
|
36,340
|
|
|
$
|
13,197
|
|
|
$
|
169,220
|
|
Goodwill acquired during the year
|
1,024
|
|
|
—
|
|
|
—
|
|
|
1,024
|
|
||||
Adjustments to preliminary purchase price allocations
|
(19
|
)
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
||||
Foreign currency translation
|
(52
|
)
|
|
(978
|
)
|
|
—
|
|
|
(1,030
|
)
|
||||
Balance at August 31, 2016
|
$
|
120,636
|
|
|
$
|
35,362
|
|
|
$
|
13,197
|
|
|
$
|
169,195
|
|
|
|
|
August 31, 2016
|
|
May 31, 2016
|
||||||||||||||||||||
|
Useful Life
(Years)
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
5-12
|
|
$
|
80,764
|
|
|
$
|
(48,986
|
)
|
|
$
|
31,778
|
|
|
$
|
81,262
|
|
|
$
|
(47,747
|
)
|
|
$
|
33,515
|
|
Software/Technology
|
3-15
|
|
17,810
|
|
|
(12,168
|
)
|
|
5,642
|
|
|
17,539
|
|
|
(11,855
|
)
|
|
5,684
|
|
||||||
Covenants not to compete
|
2-5
|
|
10,881
|
|
|
(9,440
|
)
|
|
1,441
|
|
|
10,791
|
|
|
(9,290
|
)
|
|
1,501
|
|
||||||
Other
|
2-5
|
|
7,864
|
|
|
(5,212
|
)
|
|
2,652
|
|
|
7,827
|
|
|
(5,035
|
)
|
|
2,792
|
|
||||||
Total
|
|
|
$
|
117,319
|
|
|
$
|
(75,806
|
)
|
|
$
|
41,513
|
|
|
$
|
117,419
|
|
|
$
|
(73,927
|
)
|
|
$
|
43,492
|
|
|
August 31, 2016
|
|
May 31, 2016
|
||||
|
|
|
|
||||
Accrued salaries, wages and related employee benefits
|
$
|
27,133
|
|
|
$
|
31,566
|
|
Contingent consideration, current portion
|
1,015
|
|
|
1,029
|
|
||
Accrued workers’ compensation and health benefits
|
5,640
|
|
|
4,834
|
|
||
Deferred revenue
|
3,370
|
|
|
3,332
|
|
||
Legal settlement accrual
|
6,320
|
|
|
6,320
|
|
||
Other accrued expenses
|
17,269
|
|
|
15,902
|
|
||
Total accrued expenses and other liabilities
|
$
|
60,747
|
|
|
$
|
62,983
|
|
|
August 31, 2016
|
|
May 31, 2016
|
||||
|
|
|
|
||||
Senior credit facility
|
$
|
64,780
|
|
|
$
|
68,999
|
|
Notes payable
|
328
|
|
|
10,111
|
|
||
Other
|
5,322
|
|
|
5,899
|
|
||
Total debt
|
70,430
|
|
|
85,009
|
|
||
Less: Current portion
|
(2,089
|
)
|
|
(12,553
|
)
|
||
Long-term debt, net of current portion
|
$
|
68,341
|
|
|
$
|
72,456
|
|
|
August 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,975
|
|
|
$
|
1,975
|
|
Total Liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,975
|
|
|
$
|
1,975
|
|
|
May 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,075
|
|
|
$
|
2,075
|
|
Total Liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,075
|
|
|
$
|
2,075
|
|
•
|
Services.
This segment provides asset protection solutions primarily in North America with the largest concentration in the United States and the Canadian services business, consisting primarily of non-destructive testing and inspection and engineering services that are used to evaluate the structural integrity and reliability of critical energy, industrial and public infrastructure.
|
•
|
International.
This segment offers services, products and systems similar to those of the Company’s other two segments to global markets, principally in 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.
|
|
Three months ended
|
||||||
|
August 31, 2016
|
|
August 31, 2015
|
||||
Revenues
|
|
|
|
|
|
||
Services
|
$
|
126,690
|
|
|
$
|
137,405
|
|
International
|
37,518
|
|
|
36,859
|
|
||
Products and Systems
|
6,166
|
|
|
8,686
|
|
||
Corporate and eliminations
|
(1,931
|
)
|
|
(3,097
|
)
|
||
|
$
|
168,443
|
|
|
$
|
179,853
|
|
|
Three months ended
|
||||||
|
August 31, 2016
|
|
August 31, 2015
|
||||
Gross profit
|
|
|
|
|
|
||
Services
|
$
|
34,445
|
|
|
$
|
36,569
|
|
International
|
12,387
|
|
|
10,780
|
|
||
Products and Systems
|
3,096
|
|
|
3,922
|
|
||
Corporate and eliminations
|
128
|
|
|
3
|
|
||
|
$
|
50,056
|
|
|
$
|
51,274
|
|
|
Three months ended
|
||||||
|
August 31, 2016
|
|
August 31, 2015
|
||||
Income (loss) from operations
|
|
|
|
|
|
||
Services
|
$
|
12,468
|
|
|
$
|
15,398
|
|
International
|
4,659
|
|
|
1,818
|
|
||
Products and Systems
|
137
|
|
|
1,184
|
|
||
Corporate and eliminations
|
(6,109
|
)
|
|
(5,468
|
)
|
||
|
$
|
11,155
|
|
|
$
|
12,932
|
|
|
Three months ended
|
|
||||||
|
August 31, 2016
|
|
August 31, 2015
|
|
||||
Depreciation and amortization
|
|
|
|
|
|
|
||
Services
|
$
|
5,604
|
|
|
$
|
5,522
|
|
|
International
|
1,957
|
|
|
1,972
|
|
|
||
Products and Systems
|
549
|
|
|
563
|
|
|
||
Corporate and eliminations
|
(107
|
)
|
|
(97
|
)
|
|
||
|
$
|
8,003
|
|
|
$
|
7,960
|
|
|
|
August 31, 2016
|
|
May 31, 2016
|
||||
Intangible assets, net
|
|
|
|
|
|
||
Services
|
$
|
18,250
|
|
|
$
|
19,022
|
|
International
|
16,681
|
|
|
17,703
|
|
||
Products and Systems
|
5,800
|
|
|
6,054
|
|
||
Corporate and eliminations
|
782
|
|
|
713
|
|
||
|
$
|
41,513
|
|
|
$
|
43,492
|
|
|
August 31, 2016
|
|
May 31, 2016
|
||||
Total assets
|
|
|
|
|
|
||
Services
|
$
|
292,345
|
|
|
$
|
301,678
|
|
International
|
132,523
|
|
|
132,643
|
|
||
Products and Systems
|
32,496
|
|
|
31,596
|
|
||
Corporate and eliminations
|
10,917
|
|
|
16,758
|
|
||
|
$
|
468,281
|
|
|
$
|
482,675
|
|
|
Three months ended
|
||||||
|
August 31, 2016
|
|
August 31, 2015
|
||||
Revenues
|
|
|
|
|
|
||
United States
|
$
|
116,195
|
|
|
$
|
130,344
|
|
Other Americas
|
14,978
|
|
|
11,529
|
|
||
Europe
|
33,591
|
|
|
34,884
|
|
||
Asia-Pacific
|
3,679
|
|
|
3,096
|
|
||
|
$
|
168,443
|
|
|
$
|
179,853
|
|
•
|
Services
provides asset protection solutions predominantly in North America with the largest concentration in the United States along with a growing Canadian business, consisting primarily of NDT, inspection and engineering services that are used to evaluate the structural integrity and reliability of critical energy, industrial and public infrastructure.
|
•
|
International
offers services, products and systems similar to those of the other segments to global markets, principally in 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. South America consists of our Brazil operations.
|
•
|
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.
|
|
Three months ended
|
||||||
|
August 31, 2016
|
|
August 31, 2015
|
||||
|
($ in thousands)
|
||||||
Revenues
|
$
|
168,443
|
|
|
$
|
179,853
|
|
Gross profit
|
50,056
|
|
|
51,274
|
|
||
Gross profit as a % of Revenue
|
30
|
%
|
|
29
|
%
|
||
Total operating expenses
|
38,901
|
|
|
38,342
|
|
||
Operating expenses as a % of Revenue
|
23
|
%
|
|
21
|
%
|
||
Income from operations
|
11,155
|
|
|
12,932
|
|
||
Income from Operations as a % of Revenue
|
7
|
%
|
|
7
|
%
|
||
Interest expense
|
820
|
|
|
1,922
|
|
||
Income before provision for income taxes
|
10,335
|
|
|
11,010
|
|
||
Provision for income taxes
|
3,726
|
|
|
4,163
|
|
||
Net income
|
6,609
|
|
|
6,847
|
|
||
Less: net income (loss) attributable to noncontrolling interests, net of taxes
|
$
|
13
|
|
|
(25
|
)
|
|
Net income attributable to Mistras Group, Inc.
|
$
|
6,596
|
|
|
$
|
6,872
|
|
|
Three months ended
|
||||||
|
August 31, 2016
|
|
August 31, 2015
|
||||
|
($ in thousands)
|
||||||
EBITDA and Adjusted EBITDA data
|
|
|
|
|
|
||
Net income attributable to Mistras Group, Inc.
|
$
|
6,596
|
|
|
$
|
6,872
|
|
Interest expense
|
820
|
|
|
1,922
|
|
||
Provision for income taxes
|
3,726
|
|
|
4,163
|
|
||
Depreciation and amortization
|
8,003
|
|
|
7,960
|
|
||
Share-based compensation expense
|
1,906
|
|
|
1,957
|
|
||
Acquisition-related expense (benefit), net
|
394
|
|
|
(896
|
)
|
||
Severance
|
265
|
|
|
60
|
|
||
Foreign exchange (gain) loss
|
(525
|
)
|
|
292
|
|
||
Adjusted EBITDA
|
$
|
21,185
|
|
|
$
|
22,330
|
|
|
Three months ended
|
||||||
|
August 31, 2016
|
|
August 31, 2015
|
||||
|
($ in thousands)
|
||||||
Revenues
|
|
|
|
|
|
||
Services
|
$
|
126,690
|
|
|
$
|
137,405
|
|
International
|
37,518
|
|
|
36,859
|
|
||
Products and Systems
|
6,166
|
|
|
8,686
|
|
||
Corporate and eliminations
|
(1,931
|
)
|
|
(3,097
|
)
|
||
|
$
|
168,443
|
|
|
$
|
179,853
|
|
|
Three months ended
|
||||||
|
August 31, 2016
|
|
August 31, 2015
|
||||
|
($ in thousands)
|
||||||
Gross profit
|
|
|
|
|
|
||
Services
|
$
|
34,445
|
|
|
$
|
36,569
|
|
% of segment revenue
|
27.2
|
%
|
|
26.6
|
%
|
||
International
|
12,387
|
|
|
10,780
|
|
||
% of segment revenue
|
33.0
|
%
|
|
29.2
|
%
|
||
Products and Systems
|
3,096
|
|
|
3,922
|
|
||
% of segment revenue
|
50.2
|
%
|
|
45.2
|
%
|
||
Corporate and eliminations
|
128
|
|
|
3
|
|
||
|
$
|
50,056
|
|
|
$
|
51,274
|
|
% of total revenue
|
29.7
|
%
|
|
28.5
|
%
|
|
Three months ended
|
||||||
|
August 31, 2016
|
|
August 31, 2015
|
||||
|
($ in thousands)
|
||||||
Services:
|
|
|
|
|
|
||
Income from operations
|
$
|
12,468
|
|
|
$
|
15,398
|
|
Severance costs
|
176
|
|
|
—
|
|
||
Acquisition-related expense (benefit), net
|
345
|
|
|
(930
|
)
|
||
Income before special items
|
12,989
|
|
|
14,468
|
|
||
International:
|
|
|
|
|
|
||
Income from operations
|
4,659
|
|
|
1,818
|
|
||
Severance costs
|
89
|
|
|
60
|
|
||
Acquisition-related expense (benefit), net
|
11
|
|
|
30
|
|
||
Income before special items
|
4,759
|
|
|
1,908
|
|
||
Products and Systems:
|
|
|
|
|
|
||
Income from operations
|
137
|
|
|
1,184
|
|
||
Acquisition-related expense (benefit), net
|
—
|
|
|
—
|
|
||
Income before special items
|
137
|
|
|
1,184
|
|
||
Corporate and Eliminations:
|
|
|
|
|
|
||
Loss from operations
|
(6,109
|
)
|
|
(5,468
|
)
|
||
Acquisition-related expense (benefit), net
|
38
|
|
|
4
|
|
||
Loss before special items
|
(6,071
|
)
|
|
(5,464
|
)
|
||
Total Company
|
|
|
|
|
|
||
Income from operations
|
$
|
11,155
|
|
|
$
|
12,932
|
|
Severance costs
|
$
|
265
|
|
|
$
|
60
|
|
Acquisition-related expense (benefit), net
|
$
|
394
|
|
|
$
|
(896
|
)
|
Income before special items
|
$
|
11,814
|
|
|
$
|
12,096
|
|
|
Three months ended
|
||||||
|
August 31, 2016
|
|
August 31, 2015
|
||||
|
($ in thousands)
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||
Operating activities
|
$
|
17,344
|
|
|
$
|
16,210
|
|
Investing activities
|
(4,975
|
)
|
|
(4,399
|
)
|
||
Financing activities
|
(17,847
|
)
|
|
(10,562
|
)
|
||
Effect of exchange rate changes on cash
|
(770
|
)
|
|
(118
|
)
|
||
Net change in cash and cash equivalents
|
$
|
(6,248
|
)
|
|
$
|
1,131
|
|
Fiscal Month Ending
|
Total Number of Shares (or
Units) Purchased
|
|
Average Price Paid per
Share (or Unit)
|
|||
June 30, 2016
|
266
|
|
|
$
|
24.00
|
|
July 31, 2016
|
—
|
|
|
$
|
—
|
|
August 31, 2016
|
50,420
|
|
|
$
|
25.16
|
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
Amended and Restated Bylaws
|
|
|
|
10.1
|
|
Agreement, dated August 17, 2016, between registrant and Sotirios Vahaviolos
|
|
|
|
10.2
|
|
Joint stipulation of settlement and release between Registrant and Plantiffs, with respect to
Viceral and Kruger, et al. v. Mistras Group, Inc., et al.
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31.1
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Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
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31.2
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Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
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32.1
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Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Schema Document
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101.CAL
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XBRL Calculation Linkbase Document
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101.LAB
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XBRL Labels Linkbase Document
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101.PRE
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XBRL Presentation Linkbase Document
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101.DEF
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XBRL Definition Linkbase Document
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MISTRAS GROUP, INC.
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By:
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/s/ Jonathan H. Wolk
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Jonathan H. Wolk
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Senior Executive Vice President, Chief Financial Officer and Treasurer
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(Principal Financial and Accounting Officer and duly authorized officer)
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TABLE OF CONTENTS
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PAGE
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ARTICLE 1
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CORPORATE OFFICES
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1
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1.1
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REGISTERED OFFICE
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1
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1.2
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OTHER OFFICES
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1
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ARTICLE II
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MEETINGS OF STOCKHOLDERS
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1
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2.1
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PLACE OF MEETINGS
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1
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2.2
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ANNUAL MEETING
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1
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2.3
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SPECIAL MEETING
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1
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2.4
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NOTICE OF STOCKHOLDERS' MEETINGS
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4
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2.5
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MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
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5
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2.6
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QUORUM
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6
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2.7
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ADJOURNED MEETING; NOTICE
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6
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2.8
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ADMINISTRATION OF THE MEETING
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6
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2.9
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VOTING
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7
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2.10
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STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
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8
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2.11
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RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
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8
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2.12
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PROXIES
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8
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2.13
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LIST OF STOCKHOLDERS ENTITLED TO VOTE
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9
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2.14
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NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS
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9
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2.15
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SUBMISSION OF QUESTIONNAIRE, REPRESENTATION AND AGREEMENT
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14
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ARTICLE III
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DIRECTORS
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14
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3.1
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POWERS
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14
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3.2
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NUMBER OF DIRECTORS
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15
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3.3
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ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
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15
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3.4
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RESIGNATION AND VACANCIES
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15
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3.5
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PLACE OF MEETINGS; MEETINGS BY TELEPHONE
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15
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3.6
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REGULAR MEETINGS
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15
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3.7
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SPECIAL MEETINGS; NOTICE
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16
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3.8
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QUORUM
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16
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3.9
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WAIVER OF NOTICE
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16
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3.10
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BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
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17
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3.11
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ADJOURNED MEETING; NOTICE
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17
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3.12
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FEES AND COMPENSATION OF DIRECTORS
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17
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3.13
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REMOVAL OF DIRECTORS
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17
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ARTICLE IV
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COMMITTEES
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17
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4.1
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COMMITTEES OF DIRECTORS
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17
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4.2
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COMMITTEE MINUTES
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18
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4.3
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MEETINGS AND ACTION OF COMMITTEES
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18
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ARTICLE V
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OFFICERS
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19
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5.1
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OFFICERS
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19
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5.2
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APPOINTMENT OF OFFICERS
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19
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5.3
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SUBORDINATE OFFICERS
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19
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5.4
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REMOVAL AND RESIGNATION OF OFFICERS
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19
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5.5
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VACANCIES IN OFFICES
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20
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5.6
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REPRESENTATION OF SHARES OF OTHER CORPORATIONS
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20
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5.7
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AUTHORITY AND DUTIES OF OFFICERS
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20
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ARTICLE VI
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RECORDS AND REPORTS
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20
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6.1
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MAINTENANCEAND INSPECTION OF RECORDS
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20
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6.2
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INSPECTION BY DIRECTORS
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21
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ARTICLE VII
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GENERAL MATTERS
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21
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7.1
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CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS
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21
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7.2
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EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
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21
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7.3
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STOCK CERTIFICATES; PARTLY PAID SHARES
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21
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7.4
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SPECIAL DESIGNATION ON CERTIFICATES
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21
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7.5
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LOST CERTIFICATES
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22
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7.6
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DIVIDENDS
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22
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7.7
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FISCAL YEAR
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22
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7.8
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SEAL
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22
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7.9
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TRANSFER OF STOCK
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22
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7.10
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STOCK TRANSFER AGREEMENTS
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23
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7.11
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REGISTERED STOCKHOLDERS
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23
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7.12
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WAIVER OF NOTICE
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23
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ARTICLE VIII
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NOTICE BY ELECTRONIC TRANSMISSION
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24
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8.1
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NOTICE BY ELECTRONIC TRANSMISSION
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24
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8.2
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DEFINITION OF ELECTRONIC TRANSMISSION
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25
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8.3
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INAPPLICABILITY
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25
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ARTICLE IX
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INDEMNIFICATION OF AND ADVANCEMENT OF EXPENSES TO DIRECTORS AND OFFICERS
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25
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9.1
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POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE BY OR IN THE RIGHT OF THE COMPANY
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25
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9.2
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POWER TO IMDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY
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26
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9.3
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AUTHORIZATION OF INDEMNIFICATION
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26
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9.4
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GOOD FAITH DEFINED
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26
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9.5
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INDEMNIFICATION BY A COURT
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27
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9.6
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EXPENSES PAYABLE IN ADVANCE
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27
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9.7
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NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
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28
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9.8
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INSURANCE
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28
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9.9
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CERTAIN DEFINITIONS
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28
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9.10
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SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
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29
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9.11
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LIMITATION ON INDEMNIFICATION
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29
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9.12
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INDEMNIFICATION OF EMPLOYEES AND AGENTS
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29
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9.13
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EFFECT OF AMENDMENT OR REPEAL
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29
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ARTICLE X
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MISCELLANEOUS
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29
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10.1
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PROVISIONS OF CERTIFICATE GOVERN
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29
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10.2
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CONSTRUCTION; DEFINITIONS
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30
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10.3
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SEVERABILITY
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30
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10.4
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AMENDMENT
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30
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10.5
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FORUM SELECTION
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30
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A.
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Definitions
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C.
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Settlement Components
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D.
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Release by the California Class.
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E.
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Release by the FLSA Class
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G.
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Settlement Approval Procedure
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(c)
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For the FLSA Class
:
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N.
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Mutual Full Cooperation.
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S.
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California Law Governs
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AB.
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Counterparts
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1.
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I have reviewed this report on Form 10-Q of Mistras Group, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Sotirios J. Vahaviolos
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Sotirios J. Vahaviolos
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Chairman and Chief Executive Officer
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(Principal Executive Officer)
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1.
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I have reviewed this report on Form 10-Q of Mistras Group, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Jonathan H. Wolk
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Jonathan H. Wolk
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Senior Executive Vice President, Chief Financial Officer and Treasurer
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(Principal Financial Officer)
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/s/ Sotirios J. Vahaviolos
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Sotirios J. Vahaviolos
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Chairman and Chief Executive Officer
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(Principal Executive Officer)
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/s/ Jonathan H. Wolk
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Jonathan H. Wolk
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Senior Executive Vice President, Chief Financial Officer and Treasurer
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(Principal Financial Officer)
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