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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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 Number)
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $.01 par value
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New York Stock Exchange
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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•
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traditional and advanced outsourced NDT services conducted by our technicians, mechanical integrity assessments, above-ground storage tank inspection, pipeline inspection and American Petroleum Institute (API) visual inspections and PdM program development;
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•
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destructive testing (DT), a definitive discipline in material testing, taking specimens through to mechanical failure while examining a host of factors. Hardness, stiffness and strength are a few key indicators drawn from destructive tests per customer specifications. DT is a strength of our subsidiary, Mistras-GMA in Germany, which specializes in an array of destructive testing applications utilized throughout the materials selection and approval process in the aerospace, automotive, chemical, oil and gas and power generation industries.
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advanced asset protection solutions, in most cases involving proprietary acoustic emission (AE), digital radiography, infrared, wireless and/or automated ultrasonic inspections and sensors, which are operated by our highly trained technicians;
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•
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a proprietary and customized portfolio of software products for testing and analyzing data captured in real-time by our technicians and sensors, including advanced features such as pattern recognition and neural networks;
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•
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enterprise software and relational databases to store and analyze inspection data, comparing it to prior operations and testing of similar assets, industrial standards and specific risk conditions, such as use with highly flammable or corrosive materials, and developing asset integrity management plans based on risk-based inspection that specify an optimal schedule for the testing, maintenance and retirement of assets;
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•
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on-line monitoring systems that provide secure web-based remote or on-site asset inspection, real-time reports and analysis of plant or enterprise-wide structural integrity data, comparison of integrity data to our library of historical inspection data and analysis to better assess structural integrity and provide alerts for and prioritize future inspections and maintenance;
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•
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in-house testing services: Mistras’ in-house inspection services provide cost-effective, efficient solutions that improve the integrity and lifespan of critical assets featuring a dynamic suite of testing and inspection services. With a network of in-house laboratories, Mistras provides a one-stop shop for traditional (NDT), advanced non-destructive testing (ANDT), and destructive testing (DT) of materials and fabricated structures by offering a complete inspection package — from preparation and production all the way to post-processing. These capabilities are available through our state-of-the-art testing equipment and expertise in our grid of in-house testing laboratories across the U.S.A., Canada and Europe;
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•
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full range of engineering consulting services to the downstream and renewable energy sectors that includes plant operations support covering both process and equipment technologies; project planning, management and execution; expert testimony and technical training; and
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•
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mechanical services, including wind turbine repairs and maintenance and ultra-high pressure water blasting in place of sand blasting, used for both off shore oil & gas platforms and land based refinery and chemical fixed equipment. NDT inspection services are offered while in post cleaning mode.
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•
|
Extending the Useful Life of Aging Infrastructure.
The prohibitive cost and challenge of building new infrastructure has resulted in the significant aging of existing infrastructure and caused companies to seek ways to extend the useful life of existing assets. For example, due to the significant cost associated with constructing new refineries, stringent environmental regulations which have increased the costs of managing them and difficulty in finding suitable
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•
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Outsourcing of Non-Core Activities and Technical Resource Constraints.
The increasing sophistication and automation of NDT programs, together with a decreasing supply of skilled professionals and stricter and increasing governmental regulations, has caused many companies and public authorities to outsource NDT and other services rather than recruit and train such capabilities internally. Owners and operators of infrastructure are increasingly contracting with third party providers that have the necessary technical product portfolio, engineering expertise, technical workforce and proven track record of results-oriented performance to effectively meet their increasing requirements.
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•
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Increasing Asset and Capacity Utilization.
Due to the high repair and replacement costs and the limited construction of new infrastructure, existing infrastructure in some of our target markets has experienced high usage, causing increased stress and fatigue that accelerates deterioration. These dynamic costs also motivate our customers to complete repairs, maintenance, replacements and upgrades more quickly. For example, increasing demand for refined petroleum products, combined with high plant utilization rates, is driving refineries to upgrade facilities to make them more efficient and expand capacity. In order to sustain high capacity utilization rates, customers are increasingly using asset protection solutions to efficiently ensure the integrity and safety of their assets. Implementation of asset protection solutions can also lead to increased productivity as a result of reduced maintenance-related downtime.
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•
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Increasing Corrosion from Low-Quality Inputs.
The increased availability and low cost of crude oil from areas such as shale plays and oil sands resources have led to the use of lower grade raw materials and feedstock used in refinery and power generation processes. These lower grade raw materials and feedstock, especially in the case of the refining process involving petroleum with higher sulfur content, can rapidly corrode the infrastructure with which they come into contact, which in turn increases the need for asset protection solutions to identify such corrosion and enable infrastructure owners to proactively combat the problems caused by such corrosion.
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•
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Increasing Use of Advanced Materials.
Customers in our target markets are increasingly utilizing advanced materials, such as composites, and other unique technologies in the manufacturing and construction of new infrastructure and aerospace applications. As a result, they require advanced testing, assessment and maintenance technologies to inspect and to protect these assets, since many of these advanced materials cannot be tested using traditional NDT techniques. We believe that demand for NDT solutions will increase as companies and public authorities continue to use these advanced materials, not only during the operating phase of the lifecycle of their assets, but also during the design, manufacturing and quality control phases and are more frequently integrating and embedding sensors directly into the end product in support of total life cycle asset management.
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•
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Meeting Safety Regulations.
Owners and operators of infrastructure assets increasingly face strict government regulations and safety requirements. Failure to meet these standards can result in significant financial liabilities, increased scrutiny by Occupational Safety and Health Administration (OSHA), U.S. DOT Pipeline and Hazardous Materials Safety Administration (PHMSA) and other regulators, higher insurance premiums and tarnished corporate brand value. There have been several industrial accidents, including explosions and fires, in recent years. These accidents created significant damage to the reputation of refineries and Pipeline Operators, and coupled with concern by owners, led OSHA/PHMSA to strengthen process safety enforcement standards with the continued implementation of the National Emphasis Program (NEP) that also extends to chemical plants for compliance with applicable regulations. As a result, these owners and operators are seeking highly reliable asset protection suppliers with a proven track record of providing asset protection services, products and systems to assist them in meeting these increasingly stringent regulations.
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•
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Expanding Addressable End-Markets.
Advances in NDT sensor technology and asset protection software based systems, and the continued emergence of new technologies, are creating increased demand for asset protection solutions in applications where existing techniques were previously ineffective.
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•
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Expanding Addressable Geographies.
We believe that incremental demand will continue to come from international markets, including Western and Eastern Canada, Asia, Europe and parts of Latin America. Specifically, as companies
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•
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Offering Complementary Mechanical Services
. We believe that owners of capital assets will increasingly look for a single vendor who can provide mechanical services that are complementary to inspection services, such as removing insulation in order to inspect piping, then reinstalling insulation.
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•
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Growth in U.S. energy production- While crude oil production slowed in the first quarter of calendar 2016 from record highs in 2015 at 9.4 million barrels per day (bbl/d) domestic production is still significantly higher than pre-2015 levels according to the EIA. Although tailing off slightly, production estimates for the year 2016 is predicted to level off around 9 million bbl/d.
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•
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High demand for U.S. Natural Gas - According to the EIA, demand for natural gas remains high resulting from the fact that the U.S. is experiencing record low pricing for natural gas since the middle of calendar 2015. New construction starts, based on Natural Gas feedstock, continue on an upwards trend fueled by the power and industrial markets.
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•
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The United States is continuing its trend from being a net importer of natural gas to a net exporter by the end of calendar 2017. Several facilities have already begun operations in support of the export process, with more capital expenditures planned for the coming years.
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One Source Provider for Asset Protection Solutions® Worldwide.
We believe we have the most comprehensive portfolio of proprietary and integrated asset protection solutions, including inspection and engineering services, products and systems worldwide, which positions us to be the leading single source provider for a customer’s asset protection requirements. Through our network of approximately
120
offices, supplemented by independent representatives in
14
countries around the world, we offer an extensive portfolio of solutions that enables our customers to consolidate all their inspection and maintenance requirements and the associated data storage and analytics on a single system that spans the customers’ entire enterprise.
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•
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Long-Standing Trusted Provider to a Diversified and Growing Customer Base.
By providing critical and reliable NDT services, products and systems for more than 30 years and expanding our asset protection solutions, we have become a trusted partner to a large and growing customer base across numerous infrastructure-intensive industries globally. Our customers include some of the largest and most well-recognized firms in the oil and gas, chemicals, fossil and nuclear power, and aerospace and defense industries as well as some of the largest public authorities.
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•
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Repository of Customer-Specific Inspection Data.
Our enterprise data management and analysis software, PCMS, enables us to capture, warehouse, manage and analyze our customers’ testing and inspection data in a centralized relational database. As a result, we have accumulated large amounts of proprietary process data and information that allows us to provide our customers with value-added services, such as benchmarking, risk-based inspection and reliability centered maintenance solutions including predictive maintenance, inspection scheduling, data analytics and regulatory compliance.
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•
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Proprietary Products, Software and Technology Packages.
We have developed systems that have become the cornerstone of several high value-added unique NDT applications, such as those used for the testing of above-ground storage tanks (the TANKPAC
®
technology package). These proprietary products allow us to efficiently and effectively provide highly valued solutions to our customers’ complex applications, resulting in a significant competitive advantage. In addition to the proprietary products and systems that we sell to customers on a stand-alone basis, we also develop a range of proprietary sensors, instruments, systems and software used exclusively by our Services segment.
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•
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Deep Domain Knowledge and Extensive Industry Experience.
In the field of asset protection, we have long and extensive experience and have accumulated vasts amount of data and knowledge. We have gained this through our industry leadership in developing advanced asset protection solutions, including acoustic emission testing for non-intrusive on-line monitoring of storage tanks and pressure vessels, bridges and transformers, portable corrosion mapping, ultrasonic testing (UT) systems, on-line plant asset integrity management with sensor fusion, enterprise software solutions for plant-wide and fleet-wide inspection data archiving and management, advanced and thick composites inspection and ultrasonic phased array inspection of thick wall boilers.
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•
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Collaborating with Our Customers.
Our asset protection solutions have historically been designed in response to our customers’ unique performance specifications and are supported by our proprietary technologies. Important technology packages, such as TANKPAC
for tank floor corrosion detection and Acoustic Turbine Monitoring System (ACTMS), were developed in close cooperation and partnership with key Mistras customers. Our sales and engineering teams work closely with our customers’ research and design staff during the design phase in order to incorporate our products into specified infrastructure projects, as well as with facilities maintenance personnel to ensure that we are able to provide the asset protection solutions necessary to meet these customers’ changing demands.
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•
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Experienced Management Team.
Our management team has a track record of leadership in NDT, DT, PdM and engineering services, averaging over 20 years of experience in the industry. These individuals also have extensive experience in growing businesses organically and in acquiring and integrating companies, which we believe is important to facilitate future growth in the fragmented asset protection industry. In addition, our senior managers are supported by highly experienced managers who are responsible for delivering our solutions to customers.
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•
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Continue to Develop Technology-Enabled Asset Protection Services, Products, Software and Systems.
We intend to maintain and enhance our technological leadership by continuing to invest in the internal development of new services, products, software and systems. Our highly trained team of Ph.D.’s, engineers, application software developers and certified technicians has been instrumental in developing numerous significant asset protection standards. We believe their knowledge base will continue to enable us to innovate a wide range of new asset protection solutions.
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•
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Increase [Revenues from] [Services to] Our Existing Customers.
Many of our customers are multinational corporations with asset protection requirements from multiple divisions at multiple locations across the globe. Currently, we believe we capture a relatively small portion of their overall expenditures. We believe our superior services, products and systems, combined with the trend of outsourcing asset protection solutions to a small number of trusted service providers, position us to significantly expand both the number of divisions and locations that we serve as well as the types of solutions we provide. We strive to be the preferred global partner for our customers and aim to become the single source provider for their asset protection solution requirements.
|
•
|
Add New Customers in Existing Target Markets.
Our current customer base represents a small fraction of the total number of companies in most of our target markets with asset protection requirements. Our scale, scope of products and services and expertise in creating technology-enabled solutions have allowed us to build a reputation for high-
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•
|
Continue to Expand Our Customer Base into New End Markets.
We believe we have significant opportunities to expand our customer base in relatively new end markets, including nuclear, wind turbine and other alternative energy and natural gas transportation industries. The expansion of our addressable markets is being driven by the increased recognition and adoption of asset protection services, products and systems, and new NDT technologies enabling further applications in industries such as healthcare and compressed and liquefied natural gas transportation, and the aging of infrastructure, such as construction and loading cranes and ports, to the point where visual inspection has proven inadequate and new asset protection solutions are required. We expect to continue to expand our global sales organization, grow our inspection data management and data mining services and find new high-value applications. As companies in these emerging end markets realize the benefits of our asset protection solutions, we expect to expand our leadership position by addressing customer needs and winning new business.
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•
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Continue to Capitalize on Acquisitions.
We intend to continue employing a disciplined acquisition strategy to broaden, complement and enhance our product and service offerings, add new customers and certified personnel, expand our sales channels, supplement our internal development efforts and accelerate our expected growth. We believe the market for asset protection solutions is highly fragmented with a large number of potential acquisition opportunities. We have a proven ability to integrate complementary businesses, as demonstrated by the success of our past acquisitions, which have often contributed entirely new products and services that have added to our revenues and profitability. In addition, we often sell our advanced asset protection solutions to customers of companies we acquired that had previously relied on traditional NDT solutions.
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•
|
Services.
This segment provides asset protection solutions predominantly in North America, with the largest concentration in the United States, 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 our Services and Products and Systems segments to global markets, in Europe, the Middle East, Africa, Asia and South America, but not to customers in China and South Korea, which are served by our Products and Systems segment.
|
•
|
Products and Systems.
This segment designs, manufactures, sells, installs and services our asset protection products and systems, including equipment and instrumentation, predominantly in the United States.
|
•
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Mechanical tests — Materials, specimens and even composites are subjected to increasing levels of tension, compression, shear and peeling until failure. There are a number of variations of mechanical testing in which adding temperature, strain, unidirectional load or shear can provide useful results
|
•
|
Physical/Chemical — Used to examine specific material and thermal characteristics as well as chemical compositions, including differential scanning calorimetry (DSC), high performance liquid chromatography, fiber volume content and fourier transformation infrared spectroscopy (FTIR)
|
•
|
Materialography — Gives an insight into the geometries of structural composites, which presents an inside track with regards to determining failure mechanisms and asset lifespan expectations.
|
•
|
PCMS enterprise software: A leading inspection data management system for supporting asset protection and reliability
|
•
|
ISOTRAC: A multiphase methodology to illustrate in 3-D each element of a plant to help develop an overall asset integrity management program that meets or exceeds compliance with current MI standards and regulations
|
•
|
optimal systematic testing schedules for their infrastructure based on real-time data captured by our sensors;
|
•
|
alerts that notify customers when to perform special testing services on suspect areas, enabling them to identify and resolve flaws on a timely basis by using our PCMS risk-based inspection (RBI) software module; and
|
•
|
schedules for the maintenance and retirement of assets.
|
Name
|
|
Age
|
|
Position
|
Dr. Sotirios J. Vahaviolos
|
|
70
|
|
Chairman, Chief Executive Officer and Director
|
Dennis Bertolotti
|
|
57
|
|
President and Chief Operating Officer
|
Michael C. Keefe
|
|
59
|
|
Executive Vice President, General Counsel and Secretary
|
Michael J. Lange
|
|
56
|
|
Vice Chairman, Senior Executive Vice President of Global Business Development, Marketing & Strategic Planning, and Director
|
Jonathan H. Wolk
|
|
55
|
|
Senior Executive Vice President, Chief Financial Officer and Treasurer
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•
|
whether we successfully identify suitable acquisition candidates, negotiate appropriate acquisition terms, and complete proposed acquisitions
|
•
|
whether we can successfully integrate acquired businesses into our current operations, including our accounting, internal control and information technology systems, marketing and other key infrastructure
|
•
|
whether we can adequately capture opportunities that an acquired business may offer, including the expansion into new markets in which we have no prior experience
|
•
|
whether we value an acquired business properly when determining the purchase price, terms and whether we are able to achieve the returns on the investment we expect
|
•
|
whether an acquired business can achieve levels of revenues, profitability, productivity or cost savings we expect
|
•
|
whether an acquired business is compatible with our culture and philosophy of doing business
|
•
|
unexpected loss of key personnel and customers of an acquired business;
|
•
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the assumption of liabilities and risks (including environmental-related costs) of an acquired business, some of which may not be anticipated; and
|
•
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the potential disruption of our ongoing business and distraction of management and other personnel of us and the acquired business resulting from the efforts to acquire then integrate an acquired business
|
•
|
fluctuations in currency exchange rates and interest rates;
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•
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varying regional and geopolitical business and economic conditions and demands;
|
•
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compliance with applicable foreign regulations and licensing requirements, and U.S. laws and regulation with respect to our business in other countries, including export controls and anti-bribery laws;
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•
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the cost and uncertainty of obtaining data and creating solutions that are relevant to particular geographic markets;
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•
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the need to provide sufficient levels of technical support in different locations;
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•
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the complexity of maintaining effective policies and procedures in locations around the world;
|
•
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political instability and civil unrest;
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•
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restrictions or limitations on outsourcing contracts or services abroad;
|
•
|
the impact of the United Kingdom exiting the European Union;
|
•
|
restrictions or limitations on the repatriation of funds; and
|
•
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potentially adverse tax consequences.
|
•
|
our ability to integrate our technology with new and existing hardware and software systems;
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•
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our ability to anticipate and support new standards, especially internet-based standards; and
|
•
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our ability to integrate additional software modules under development with our existing technology and operational processes.
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•
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allow the authorized number of directors to be changed only by resolution of our board of directors;
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•
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require that vacancies on the board of directors, including newly created directorships, be filled only by a majority vote of directors then in office;
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•
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authorize our board of directors to issue, without stockholder approval, preferred stock that, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our board of directors;
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•
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require that stockholder actions must be effected at a duly called stockholder meeting by prohibiting stockholder action by written consent;
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•
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prohibit cumulative voting in the election of directors, which may otherwise allow holders of less than a majority of stock to elect some directors; and
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•
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establish advance notice requirements for stockholder nominations to our board of directors or for stockholder proposals that can be acted on at stockholder meetings and limit the right to call special meetings of stockholders to the Chairman of the Board, the Chief Executive Officer, the board of directors acting pursuant to a resolution adopted by a majority of directors or the Secretary upon the written request of stockholders entitled to cast not less than 35% of all the votes entitled to be cast at such meeting.
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Transition period ended December 31, 2016
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||||||
Transition period:
|
High
|
|
Low
|
||||
Quarter ended June 30, 2016
(1)
|
$
|
25.32
|
|
|
$
|
23.01
|
|
Quarter ended September 30, 2016
|
$
|
25.86
|
|
|
$
|
22.81
|
|
Quarter ended December 31, 2016
|
$
|
26.07
|
|
|
$
|
20.04
|
|
|
|
Year ended May 31, 2016
|
|
Year ended May 31, 2015
|
||||||||||||
|
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
Quarter ended August 31,
|
|
$
|
20.14
|
|
|
$
|
13.88
|
|
|
$
|
25.04
|
|
|
$
|
20.70
|
|
Quarter ended November 30,
|
|
$
|
21.53
|
|
|
$
|
12.79
|
|
|
$
|
21.55
|
|
|
$
|
15.98
|
|
Quarter ended February 28,
|
|
$
|
22.59
|
|
|
$
|
18.42
|
|
|
$
|
21.50
|
|
|
$
|
15.87
|
|
Quarter ended May 31,
|
|
$
|
26.00
|
|
|
$
|
22.02
|
|
|
$
|
19.34
|
|
|
$
|
17.50
|
|
Month Ending
|
|
Total Number of
Shares (or Units)
Purchased
|
|
Average Price Paid
per Share (or Unit)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(1)
|
|
Approximate dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
(1)
|
|||||
December 31, 2016
|
|
92,795
|
|
$
|
21.55
|
|
|
92,795
|
|
|
$
|
41,004,574
|
|
|
|
For the Transition period ended
|
|
For the year ended May 31,
|
|
||||||||||||||||||||
|
|
December 31, 2016 (1)
|
|
2016 (2)
|
|
2015 (2)
|
|
2014 (2)
|
|
2013 (3)
|
|
2012 (4)
|
|
||||||||||||
|
|
|
|
($ in thousands, except per share data)
|
|
||||||||||||||||||||
Statement of Income Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Revenues
|
|
$
|
404,161
|
|
|
$
|
719,181
|
|
|
$
|
711,252
|
|
|
$
|
623,447
|
|
|
$
|
529,282
|
|
|
$
|
436,875
|
|
|
Gross profit
|
|
117,004
|
|
|
203,008
|
|
|
184,733
|
|
|
172,943
|
|
|
148,371
|
|
|
129,690
|
|
|
||||||
Income from operations
|
|
17,533
|
|
|
43,177
|
|
|
30,353
|
|
|
38,295
|
|
|
27,554
|
|
|
36,098
|
|
|
||||||
Net income attributable to Mistras Group, Inc.
|
|
$
|
9,568
|
|
|
$
|
24,654
|
|
|
$
|
16,081
|
|
|
$
|
22,518
|
|
|
$
|
11,646
|
|
|
$
|
21,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Per Share Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
28,989
|
|
|
28,856
|
|
|
28,613
|
|
|
28,365
|
|
|
28,141
|
|
|
27,839
|
|
|
||||||
Diluted
|
|
30,125
|
|
|
29,891
|
|
|
29,590
|
|
|
29,324
|
|
|
29,106
|
|
|
28,685
|
|
|
||||||
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
$
|
0.33
|
|
|
$
|
0.85
|
|
|
$
|
0.56
|
|
|
$
|
0.79
|
|
|
$
|
0.41
|
|
|
$
|
0.77
|
|
|
Diluted
|
|
$
|
0.32
|
|
|
$
|
0.82
|
|
|
$
|
0.54
|
|
|
$
|
0.77
|
|
|
$
|
0.40
|
|
|
$
|
0.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cash and cash equivalents
|
|
$
|
19,154
|
|
|
$
|
21,188
|
|
|
$
|
10,555
|
|
|
$
|
10,020
|
|
|
$
|
7,802
|
|
|
$
|
8,410
|
|
|
Total assets
|
|
469,427
|
|
|
482,675
|
|
|
471,727
|
|
|
443,972
|
|
|
377,997
|
|
|
329,816
|
|
|
||||||
Total long-term debt and obligations under capital leases, including current portion
|
|
103,466
|
|
|
104,776
|
|
|
132,822
|
|
|
97,563
|
|
|
77,956
|
|
|
59,274
|
|
|
||||||
Total Mistras Group, Inc. stockholders’ equity
|
|
$
|
270,582
|
|
|
$
|
276,163
|
|
|
$
|
244,819
|
|
|
$
|
242,104
|
|
|
$
|
210,053
|
|
|
$
|
193,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net cash provided by operating activities
|
|
$
|
30,259
|
|
|
$
|
68,124
|
|
|
$
|
49,840
|
|
|
$
|
36,873
|
|
|
$
|
43,503
|
|
|
$
|
31,402
|
|
|
Net cash used in investing activities
|
|
(17,374
|
)
|
|
(16,752
|
)
|
|
(49,651
|
)
|
|
(38,005
|
)
|
|
(45,479
|
)
|
|
(37,512
|
)
|
|
||||||
Net cash (used in) provided by financing activities
|
|
(12,869
|
)
|
|
(40,378
|
)
|
|
2,066
|
|
|
3,262
|
|
|
1,144
|
|
|
2,009
|
|
|
•
|
Forward-Looking Statements
|
•
|
Overview
|
•
|
Consolidated Results of Operations
|
•
|
Liquidity and Capital Resources
|
•
|
Critical Accounting Estimates
|
•
|
Recent Accounting Pronouncements
|
•
|
Services
provides asset protection solutions predominantly in North America, with the largest concentration in the United States, 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, 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
designs, manufactures, sells, installs and services the Company’s asset protection products and systems, including equipment and instrumentation, predominantly in the United States.
|
|
|
For the Transition period ended December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
($ in thousands)
|
|
(unaudited)
|
||||
Revenues
|
|
$
|
404,161
|
|
|
$
|
427,913
|
|
Gross profit
|
|
117,004
|
|
|
123,190
|
|
||
Gross profit as a % of Revenue
|
|
29
|
%
|
|
29
|
%
|
||
Total operating expenses
|
|
99,471
|
|
|
88,092
|
|
||
Operating expenses as a % of Revenue
|
|
25
|
%
|
|
21
|
%
|
||
Income from operations
|
|
17,533
|
|
|
35,098
|
|
||
Income from operations as a % of Revenue
|
|
4
|
%
|
|
8
|
%
|
||
Interest expense
|
|
2,052
|
|
|
3,672
|
|
||
Income before provision for income taxes
|
|
15,481
|
|
|
31,426
|
|
||
Provision for income taxes
|
|
5,870
|
|
|
11,627
|
|
||
Net income
|
|
9,611
|
|
|
19,799
|
|
||
Less: net income (loss) attributable to noncontrolling interests, net of taxes
|
|
43
|
|
|
(15
|
)
|
||
Net income attributable to Mistras Group, Inc.
|
|
$
|
9,568
|
|
|
$
|
19,814
|
|
|
For the year ended May 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
($ in thousands)
|
||||||||||
Revenues
|
$
|
719,181
|
|
|
$
|
711,252
|
|
|
$
|
623,447
|
|
Gross profit
|
203,008
|
|
|
184,733
|
|
|
172,943
|
|
|||
Gross profit as a % of Revenue
|
28
|
%
|
|
26
|
%
|
|
28
|
%
|
|||
Total operating expenses
|
159,831
|
|
|
154,380
|
|
|
134,648
|
|
|||
Operating expenses as a % of Revenue
|
22
|
%
|
|
22
|
%
|
|
22
|
%
|
|||
Income from operations
|
43,177
|
|
|
30,353
|
|
|
38,295
|
|
|||
Income from operations as a % of Revenue
|
6
|
%
|
|
4
|
%
|
|
6
|
%
|
|||
Interest expense
|
4,762
|
|
|
4,622
|
|
|
3,192
|
|
|||
Income before provision for income taxes
|
38,415
|
|
|
25,731
|
|
|
35,103
|
|
|||
Provision for income taxes
|
13,765
|
|
|
9,740
|
|
|
12,528
|
|
|||
Net income
|
24,650
|
|
|
15,991
|
|
|
22,575
|
|
|||
Less: net (loss) income attributable to noncontrolling interests, net of taxes
|
(4
|
)
|
|
(90
|
)
|
|
57
|
|
|||
Net income attributable to Mistras Group, Inc.
|
$
|
24,654
|
|
|
$
|
16,081
|
|
|
$
|
22,518
|
|
|
|
For the Transition period ended December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
($ in thousands)
|
|
(unaudited)
|
||||
Revenues
|
|
|
|
|
|
|||
Services
|
|
$
|
293,218
|
|
|
$
|
327,118
|
|
International
|
|
104,013
|
|
|
87,411
|
|
||
Products and Systems
|
|
14,541
|
|
|
18,786
|
|
||
Corporate and eliminations
|
|
(7,611
|
)
|
|
(5,402
|
)
|
||
|
|
$
|
404,161
|
|
|
$
|
427,913
|
|
|
For the year ended May 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
($ in thousands)
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|||
Services
|
$
|
553,279
|
|
|
$
|
540,224
|
|
|
$
|
443,229
|
|
International
|
143,025
|
|
|
146,953
|
|
|
161,395
|
|
|||
Products and Systems
|
30,293
|
|
|
31,255
|
|
|
33,544
|
|
|||
Corporate and eliminations
|
(7,416
|
)
|
|
(7,180
|
)
|
|
(14,721
|
)
|
|||
|
$
|
719,181
|
|
|
$
|
711,252
|
|
|
$
|
623,447
|
|
|
|
For the Transition period ended December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
($ in thousands)
|
|
(unaudited)
|
||||
Gross profit
|
|
|
|
|
|
|||
Services
|
|
$
|
75,784
|
|
|
$
|
87,514
|
|
% of segment revenue
|
|
25.8
|
%
|
|
26.8
|
%
|
||
International
|
|
34,210
|
|
|
26,762
|
|
||
% of segment revenue
|
|
32.9
|
%
|
|
30.6
|
%
|
||
Products and Systems
|
|
6,920
|
|
|
8,986
|
|
||
% of segment revenue
|
|
47.6
|
%
|
|
47.8
|
%
|
||
Corporate and eliminations
|
|
90
|
|
|
(72
|
)
|
||
|
|
$
|
117,004
|
|
|
123,190
|
|
|
% of total revenue
|
|
28.9
|
%
|
|
28.8
|
%
|
|
For the year ended May 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
($ in thousands)
|
||||||||||
Gross profit
|
|
|
|
|
|
|
|
|
|||
Services
|
$
|
145,262
|
|
|
$
|
135,201
|
|
|
$
|
114,182
|
|
% of segment revenue
|
26.3
|
%
|
|
25.0
|
%
|
|
25.8
|
%
|
|||
International
|
43,613
|
|
|
34,572
|
|
|
44,893
|
|
|||
% of segment revenue
|
30.5
|
%
|
|
23.5
|
%
|
|
27.8
|
%
|
|||
Products and Systems
|
14,022
|
|
|
14,314
|
|
|
14,495
|
|
|||
% of segment revenue
|
46.3
|
%
|
|
45.8
|
%
|
|
43.2
|
%
|
|||
Corporate and eliminations
|
111
|
|
|
646
|
|
|
(627
|
)
|
|||
|
$
|
203,008
|
|
|
$
|
184,733
|
|
|
$
|
172,943
|
|
% of total revenue
|
28.2
|
%
|
|
26.0
|
%
|
|
27.7
|
%
|
|
For the transition period ended December 31,
|
||||||
|
2016
|
|
2015 (unaudited)
|
||||
|
($ in thousands)
|
||||||
Services:
|
|
|
|
|
|
||
Income from operations (GAAP)
|
$
|
22,411
|
|
|
$
|
37,175
|
|
Severance costs
|
77
|
|
|
188
|
|
||
Acquisition-related expense (benefit), net
|
236
|
|
|
(593
|
)
|
||
Income before special items (non-GAAP)
|
22,724
|
|
|
36,770
|
|
||
|
|
|
|
||||
International:
|
|
|
|
|
|
||
Income from operations (GAAP)
|
10,597
|
|
|
6,888
|
|
||
Severance costs
|
474
|
|
|
175
|
|
||
Asset write-offs and lease terminations
|
1,042
|
|
|
—
|
|
||
Acquisition-related expense (benefit), net
|
29
|
|
|
(457
|
)
|
||
Income before special items (non-GAAP)
|
12,142
|
|
|
6,606
|
|
||
|
|
|
|
||||
Products and Systems:
|
|
|
|
|
|||
(Loss) income from operations (GAAP)
|
(254
|
)
|
|
2,613
|
|
||
Severance costs
|
14
|
|
|
17
|
|
||
(Loss) income before special items (non-GAAP)
|
(240
|
)
|
|
2,630
|
|
||
|
|
|
|
||||
Corporate and Eliminations:
|
|
|
|
|
|
||
Loss from operations (GAAP)
|
(15,221
|
)
|
|
(11,578
|
)
|
||
Severance costs
|
133
|
|
|
—
|
|
||
Acquisition-related expense (benefit), net
|
231
|
|
|
91
|
|
||
Loss before special items (non-GAAP)
|
(14,857
|
)
|
|
(11,487
|
)
|
||
|
|
|
|
||||
Total Company
|
|
|
|
|
|
||
Income from operations (GAAP)
|
$
|
17,533
|
|
|
$
|
35,098
|
|
Severance costs
|
$
|
698
|
|
|
$
|
380
|
|
Asset write-offs and lease terminations
|
$
|
1,042
|
|
|
$
|
—
|
|
Acquisition-related expense (benefit), net
|
$
|
496
|
|
|
$
|
(959
|
)
|
Income before special items (non-GAAP)
|
$
|
19,769
|
|
|
$
|
34,519
|
|
|
For the year ended May 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
($ in thousands)
|
||||||||||
Services:
|
|
|
|
|
|
|
|
|
|||
Income from operations (GAAP)
|
$
|
52,552
|
|
|
$
|
49,142
|
|
|
$
|
43,221
|
|
Legal settlement
|
6,320
|
|
|
—
|
|
|
—
|
|
|||
Severance costs
|
188
|
|
|
—
|
|
|
—
|
|
|||
Acquisition-related expense (benefit), net
|
(1,061
|
)
|
|
(639
|
)
|
|
1,625
|
|
|||
Income before special items (non-GAAP)
|
57,999
|
|
|
48,503
|
|
|
44,846
|
|
|||
|
|
|
|
|
|
||||||
International:
|
|
|
|
|
|
|
|
|
|||
Income (loss) from operations (GAAP)
|
$
|
9,293
|
|
|
$
|
(575
|
)
|
|
$
|
10,238
|
|
Severance costs
|
885
|
|
|
1,082
|
|
|
306
|
|
|||
Asset write-offs and lease terminations
|
—
|
|
|
872
|
|
|
—
|
|
|||
Acquisition-related expense (benefit), net
|
(520
|
)
|
|
(2,926
|
)
|
|
(3,452
|
)
|
|||
Income (loss) before special items (non-GAAP)
|
9,658
|
|
|
(1,547
|
)
|
|
7,092
|
|
|||
|
|
|
|
|
|
||||||
Products and Systems:
|
|
|
|
|
|
|
|
||||
Income from operations (GAAP)
|
$
|
2,688
|
|
|
$
|
2,461
|
|
|
$
|
2,552
|
|
Severance costs
|
34
|
|
|
99
|
|
|
—
|
|
|||
Asset write-offs and lease terminations
|
—
|
|
|
157
|
|
|
—
|
|
|||
Acquisition-related expense (benefit), net
|
—
|
|
|
—
|
|
|
(1,035
|
)
|
|||
Income before special items (non-GAAP)
|
2,722
|
|
|
2,717
|
|
|
1,517
|
|
|||
|
|
|
|
|
|
||||||
Corporate and Eliminations:
|
|
|
|
|
|
|
|
|
|||
Loss from operations (GAAP)
|
$
|
(21,356
|
)
|
|
$
|
(20,675
|
)
|
|
$
|
(17,716
|
)
|
Severance costs
|
—
|
|
|
542
|
|
|
—
|
|
|||
Charges related to sale of foreign operations
|
—
|
|
|
2,516
|
|
|
—
|
|
|||
Acquisition-related expense (benefit), net
|
128
|
|
|
(1,602
|
)
|
|
205
|
|
|||
Loss before special items (non-GAAP)
|
(21,228
|
)
|
|
(19,219
|
)
|
|
(17,511
|
)
|
|||
|
|
|
|
|
|
||||||
Total Company
|
|
|
|
|
|
|
|
|
|||
Income from operations (GAAP)
|
$
|
43,177
|
|
|
$
|
30,353
|
|
|
$
|
38,295
|
|
Legal settlement
|
$
|
6,320
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Severance costs
|
$
|
1,107
|
|
|
$
|
1,723
|
|
|
$
|
306
|
|
Asset write-offs and lease terminations
|
$
|
—
|
|
|
$
|
1,029
|
|
|
$
|
—
|
|
Charges related to sale of foreign operations
|
$
|
—
|
|
|
$
|
2,516
|
|
|
$
|
—
|
|
Acquisition-related expense (benefit), net
|
$
|
(1,453
|
)
|
|
$
|
(5,167
|
)
|
|
$
|
(2,657
|
)
|
Income before special items (non-GAAP)
|
$
|
49,151
|
|
|
$
|
30,454
|
|
|
$
|
35,944
|
|
|
|
For the Transition period ended December 31,
|
|
For the year ended May 31,
|
||||||||||||
|
|
2016
|
|
2016
|
|
2015
|
|
2014
|
||||||||
($ in thousands)
|
|
|
|
|
|
|
|
|
||||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating Activities
|
|
$
|
30,259
|
|
|
$
|
68,124
|
|
|
$
|
49,840
|
|
|
$
|
36,873
|
|
Investing Activities
|
|
(17,374
|
)
|
|
(16,752
|
)
|
|
(49,651
|
)
|
|
(38,005
|
)
|
||||
Financing Activities
|
|
(12,869
|
)
|
|
(40,378
|
)
|
|
2,066
|
|
|
3,262
|
|
||||
Effect of exchange rate changes on cash
|
|
(2,050
|
)
|
|
(361
|
)
|
|
(1,720
|
)
|
|
88
|
|
||||
Net change in cash and cash equivalents
|
|
$
|
(2,034
|
)
|
|
$
|
10,633
|
|
|
$
|
535
|
|
|
$
|
2,218
|
|
($ in thousands)
|
|
Total
|
|
December 31, 2017
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2020
|
|
December 31, 2021
|
|
Thereafter
|
||||||||||||||
Long-term debt (1)
|
|
$
|
87,296
|
|
|
$
|
1,379
|
|
|
$
|
881
|
|
|
$
|
83,494
|
|
|
$
|
411
|
|
|
$
|
194
|
|
|
$
|
937
|
|
Capital lease obligations (2)
|
|
17,188
|
|
|
7,033
|
|
|
5,312
|
|
|
3,008
|
|
|
1,191
|
|
|
556
|
|
|
88
|
|
|||||||
Operating lease obligations
|
|
43,351
|
|
|
9,390
|
|
|
8,068
|
|
|
6,115
|
|
|
4,566
|
|
|
3,603
|
|
|
11,609
|
|
|||||||
Contingent consideration obligations (3)
|
|
3,094
|
|
|
1,826
|
|
|
636
|
|
|
632
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total
|
|
$
|
150,929
|
|
|
$
|
19,628
|
|
|
$
|
14,897
|
|
|
$
|
93,249
|
|
|
$
|
6,168
|
|
|
$
|
4,353
|
|
|
$
|
12,634
|
|
(1)
|
Consists primarily of the principal portion of borrowings from our senior credit facility and seller notes payable in connection with our acquisitions and includes the current portion outstanding.
|
(2)
|
Includes estimated cash interest to be paid over the remaining terms of the leases.
|
(3)
|
Consists of payments deemed reasonably likely to occur in connection with our acquisitions
|
|
December 31,
|
|
May 31,
|
||||||||
|
2016
|
|
2016
|
|
2015
|
||||||
ASSETS
|
|
|
|
|
|
|
|
||||
Current Assets
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
19,154
|
|
|
$
|
21,188
|
|
|
$
|
10,555
|
|
Accounts receivable, net
|
130,852
|
|
|
137,913
|
|
|
133,228
|
|
|||
Inventories
|
10,017
|
|
|
9,918
|
|
|
10,841
|
|
|||
Deferred income taxes
|
6,230
|
|
|
6,216
|
|
|
5,144
|
|
|||
Prepaid expenses and other current assets
|
16,399
|
|
|
12,711
|
|
|
11,698
|
|
|||
Total current assets
|
182,652
|
|
|
187,946
|
|
|
171,466
|
|
|||
Property, plant and equipment, net
|
73,149
|
|
|
78,676
|
|
|
79,256
|
|
|||
Intangible assets, net
|
40,007
|
|
|
43,492
|
|
|
51,276
|
|
|||
Goodwill
|
169,940
|
|
|
169,220
|
|
|
166,414
|
|
|||
Deferred income taxes
|
1,086
|
|
|
1,000
|
|
|
1,208
|
|
|||
Other assets
|
2,593
|
|
|
2,341
|
|
|
2,107
|
|
|||
Total Assets
|
$
|
469,427
|
|
|
$
|
482,675
|
|
|
$
|
471,727
|
|
|
|
|
|
|
|
||||||
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
||||
Current Liabilities
|
|
|
|
|
|
|
|
||||
Accounts payable
|
$
|
6,805
|
|
|
$
|
10,796
|
|
|
$
|
10,529
|
|
Accrued expenses and other current liabilities
|
58,697
|
|
|
62,983
|
|
|
55,914
|
|
|||
Current portion of long-term debt
|
1,379
|
|
|
12,553
|
|
|
17,902
|
|
|||
Current portion of capital lease obligations
|
6,488
|
|
|
7,835
|
|
|
8,646
|
|
|||
Income taxes payable
|
4,342
|
|
|
2,710
|
|
|
532
|
|
|||
Total current liabilities
|
77,711
|
|
|
96,877
|
|
|
93,523
|
|
|||
Long-term debt, net of current portion
|
85,917
|
|
|
72,456
|
|
|
95,557
|
|
|||
Obligations under capital leases, net of current portion
|
9,682
|
|
|
11,932
|
|
|
10,717
|
|
|||
Deferred income taxes
|
17,584
|
|
|
18,328
|
|
|
16,984
|
|
|||
Other long-term liabilities
|
7,789
|
|
|
6,794
|
|
|
9,934
|
|
|||
Total Liabilities
|
198,683
|
|
|
206,387
|
|
|
226,715
|
|
|||
|
|
|
|
|
|
||||||
Commitments and contingencies
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
||||||
Equity
|
|
|
|
|
|
|
|
||||
Preferred stock, 10,000,000 shares authorized
|
—
|
|
|
—
|
|
|
—
|
|
|||
Common stock, $0.01 par value, 200,000,000 shares authorized, 29,216,745, 28,939,993 and 28,703,320 shares issued
|
292
|
|
|
290
|
|
|
287
|
|
|||
Additional paid-in capital
|
217,211
|
|
|
213,737
|
|
|
208,064
|
|
|||
Treasury stock at cost, 420,258, 0 and 0 shares
|
(9,000
|
)
|
|
—
|
|
|
—
|
|
|||
Retained earnings
|
91,803
|
|
|
82,235
|
|
|
57,581
|
|
|||
Accumulated other comprehensive loss
|
(29,724
|
)
|
|
(20,099
|
)
|
|
(21,113
|
)
|
|||
Total Mistras Group, Inc. stockholders’ equity
|
270,582
|
|
|
276,163
|
|
|
244,819
|
|
|||
Noncontrolling interests
|
162
|
|
|
125
|
|
|
193
|
|
|||
Total Equity
|
270,744
|
|
|
276,288
|
|
|
245,012
|
|
|||
Total Liabilities and Equity
|
$
|
469,427
|
|
|
$
|
482,675
|
|
|
$
|
471,727
|
|
|
For the Transition Period ended December 31,
|
|
For the year ended May 31,
|
||||||||||||
|
2016
|
|
2016
|
|
2015
|
|
2014
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenue
|
$
|
404,161
|
|
|
$
|
719,181
|
|
|
$
|
711,252
|
|
|
$
|
623,447
|
|
Cost of revenue
|
274,298
|
|
|
494,911
|
|
|
506,281
|
|
|
432,695
|
|
||||
Depreciation
|
12,859
|
|
|
21,262
|
|
|
20,238
|
|
|
17,809
|
|
||||
Gross profit
|
117,004
|
|
|
203,008
|
|
|
184,733
|
|
|
172,943
|
|
||||
Selling, general and administrative expenses
|
91,058
|
|
|
141,229
|
|
|
143,978
|
|
|
123,690
|
|
||||
Research and engineering
|
1,577
|
|
|
2,523
|
|
|
2,521
|
|
|
2,995
|
|
||||
Depreciation and amortization
|
6,340
|
|
|
11,212
|
|
|
13,048
|
|
|
10,620
|
|
||||
Acquisition-related expense (benefit), net
|
496
|
|
|
(1,453
|
)
|
|
(5,167
|
)
|
|
(2,657
|
)
|
||||
Legal settlement
|
—
|
|
|
6,320
|
|
|
—
|
|
|
—
|
|
||||
Income from operations
|
17,533
|
|
|
43,177
|
|
|
30,353
|
|
|
38,295
|
|
||||
Interest expense
|
2,052
|
|
|
4,762
|
|
|
4,622
|
|
|
3,192
|
|
||||
Income before provision for income taxes
|
15,481
|
|
|
38,415
|
|
|
25,731
|
|
|
35,103
|
|
||||
Provision for income taxes
|
5,870
|
|
|
13,765
|
|
|
9,740
|
|
|
12,528
|
|
||||
Net income
|
9,611
|
|
|
24,650
|
|
|
15,991
|
|
|
22,575
|
|
||||
Less: net income (loss) attributable to noncontrolling interests, net of taxes
|
43
|
|
|
(4
|
)
|
|
(90
|
)
|
|
57
|
|
||||
Net income attributable to Mistras Group, Inc.
|
$
|
9,568
|
|
|
$
|
24,654
|
|
|
$
|
16,081
|
|
|
$
|
22,518
|
|
Earnings per common share
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
$
|
0.33
|
|
|
$
|
0.85
|
|
|
$
|
0.56
|
|
|
$
|
0.79
|
|
Diluted
|
$
|
0.32
|
|
|
$
|
0.82
|
|
|
$
|
0.54
|
|
|
$
|
0.77
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
28,989
|
|
|
28,856
|
|
|
28,613
|
|
|
28,365
|
|
||||
Diluted
|
30,125
|
|
|
29,891
|
|
|
29,590
|
|
|
29,324
|
|
|
For the Transition Period ended December 31,
|
|
For the year ended May 31,
|
||||||||||||
|
2016
|
|
2016
|
|
2015
|
|
2014
|
||||||||
Net income
|
$
|
9,611
|
|
|
$
|
24,650
|
|
|
$
|
15,991
|
|
|
$
|
22,575
|
|
|
|
|
|
|
|
|
|
|
|||||||
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency translation adjustments
|
(9,625
|
)
|
|
1,014
|
|
|
(19,602
|
)
|
|
2,941
|
|
||||
Comprehensive (loss) income
|
(14
|
)
|
|
25,664
|
|
|
(3,611
|
)
|
|
25,516
|
|
||||
Less: net income (loss) attributable to noncontrolling interests
|
43
|
|
|
(4
|
)
|
|
(90
|
)
|
|
57
|
|
||||
Foreign currency translation adjustments attributable to noncontrolling interests
|
6
|
|
|
1
|
|
|
5
|
|
|
(4
|
)
|
||||
Comprehensive (loss) income attributable to Mistras Group, Inc.
|
$
|
(51
|
)
|
|
$
|
25,669
|
|
|
$
|
(3,516
|
)
|
|
$
|
25,455
|
|
|
Common Stock
|
|
Treasury Stock
|
Additional
paid-in capital
|
|
Retained
earnings
|
|
Accumulated
other
comprehensive income (loss)
|
|
Total
Mistras Group,
Inc.
Stockholders’ Equity
|
|
Noncontrolling Interest
|
|
|
|||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
Total Equity
|
||||||||||||||||||||||||
Balance at May 31, 2013
|
28,211
|
|
|
$
|
282
|
|
|
—
|
|
|
$
|
—
|
|
$
|
195,241
|
|
|
$
|
18,982
|
|
|
$
|
(4,452
|
)
|
|
$
|
210,053
|
|
|
$
|
227
|
|
|
$
|
210,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
22,518
|
|
|
—
|
|
|
22,518
|
|
|
57
|
|
|
22,575
|
|
|||||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
2,941
|
|
|
2,941
|
|
|
4
|
|
|
2,945
|
|
|||||||||
Share-based payments
|
19
|
|
|
—
|
|
|
—
|
|
|
—
|
|
6,261
|
|
|
—
|
|
|
—
|
|
|
6,261
|
|
|
—
|
|
|
6,261
|
|
|||||||||
Net settlement on vesting of restricted stock units
|
123
|
|
|
1
|
|
|
—
|
|
|
—
|
|
(1,007
|
)
|
|
—
|
|
|
|
|
|
(1,006
|
)
|
|
—
|
|
|
(1,006
|
)
|
|||||||||
Excess tax benefit from share-based payment compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
340
|
|
|
—
|
|
|
—
|
|
|
340
|
|
|
—
|
|
|
340
|
|
|||||||||
Exercise of stock options
|
103
|
|
|
1
|
|
|
—
|
|
|
—
|
|
996
|
|
|
—
|
|
|
—
|
|
|
997
|
|
|
—
|
|
|
997
|
|
|||||||||
Balance at May 31, 2014
|
28,456
|
|
|
$
|
284
|
|
|
—
|
|
|
$
|
—
|
|
$
|
201,831
|
|
|
$
|
41,500
|
|
|
$
|
(1,511
|
)
|
|
$
|
242,104
|
|
|
$
|
288
|
|
|
$
|
242,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
16,081
|
|
|
—
|
|
|
16,081
|
|
|
(90
|
)
|
|
15,991
|
|
|||||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
(19,602
|
)
|
|
(19,602
|
)
|
|
(5
|
)
|
|
(19,607
|
)
|
|||||||||
Share-based payments
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
6,579
|
|
|
—
|
|
|
—
|
|
|
6,579
|
|
|
—
|
|
|
6,579
|
|
|||||||||
Net settlement on vesting of restricted stock units
|
161
|
|
|
2
|
|
|
—
|
|
|
—
|
|
(1,483
|
)
|
|
—
|
|
|
—
|
|
|
(1,481
|
)
|
|
—
|
|
|
(1,481
|
)
|
|||||||||
Excess tax benefit from share-based payment compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
388
|
|
|
—
|
|
|
—
|
|
|
388
|
|
|
—
|
|
|
388
|
|
|||||||||
Exercise of stock options
|
65
|
|
|
1
|
|
|
—
|
|
|
—
|
|
749
|
|
|
—
|
|
|
—
|
|
|
750
|
|
|
—
|
|
|
750
|
|
|||||||||
Balance at May 31, 2015
|
28,703
|
|
|
$
|
287
|
|
|
—
|
|
|
$
|
—
|
|
$
|
208,064
|
|
|
$
|
57,581
|
|
|
$
|
(21,113
|
)
|
|
$
|
244,819
|
|
|
$
|
193
|
|
|
$
|
245,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
24,654
|
|
|
—
|
|
|
24,654
|
|
|
(4
|
)
|
|
24,650
|
|
|||||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
1,014
|
|
|
1,014
|
|
|
(64
|
)
|
|
950
|
|
|||||||||
Share-based payments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
6,394
|
|
|
—
|
|
|
—
|
|
|
6,394
|
|
|
—
|
|
|
6,394
|
|
|||||||||
Net settlement on vesting of restricted stock units
|
182
|
|
|
2
|
|
|
—
|
|
|
—
|
|
(1,093
|
)
|
|
—
|
|
|
—
|
|
|
(1,091
|
)
|
|
—
|
|
|
(1,091
|
)
|
|||||||||
Excess tax benefit from share-based payment compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(170
|
)
|
|
—
|
|
|
—
|
|
|
(170
|
)
|
|
—
|
|
|
(170
|
)
|
|||||||||
Exercise of stock options
|
55
|
|
|
1
|
|
|
—
|
|
|
—
|
|
542
|
|
|
—
|
|
|
—
|
|
|
543
|
|
|
—
|
|
|
543
|
|
|||||||||
Balance at May 31, 2016
|
28,940
|
|
|
$
|
290
|
|
|
—
|
|
|
$
|
—
|
|
$
|
213,737
|
|
|
$
|
82,235
|
|
|
$
|
(20,099
|
)
|
|
$
|
276,163
|
|
|
$
|
125
|
|
|
$
|
276,288
|
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
9,568
|
|
|
—
|
|
|
9,568
|
|
|
43
|
|
|
9,611
|
|
|||||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
(9,625
|
)
|
|
(9,625
|
)
|
|
(6
|
)
|
|
(9,631
|
)
|
|||||||||
Share-based payments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
4,627
|
|
|
—
|
|
|
—
|
|
|
4,627
|
|
|
—
|
|
|
4,627
|
|
|||||||||
Net settlement on vesting of restricted stock units
|
212
|
|
|
2
|
|
|
—
|
|
|
—
|
|
(2,325
|
)
|
|
—
|
|
|
—
|
|
|
(2,323
|
)
|
|
—
|
|
|
(2,323
|
)
|
|||||||||
Excess tax benefit from share-based payment compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
568
|
|
|
—
|
|
|
—
|
|
|
568
|
|
|
—
|
|
|
568
|
|
|||||||||
Purchase of treasury stock
|
|
|
—
|
|
|
(420
|
)
|
|
(9,000
|
)
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,000
|
)
|
|
—
|
|
|
(9,000
|
)
|
||||||||||
Exercise of stock options
|
65
|
|
|
|
|
|
|
|
604
|
|
|
—
|
|
|
—
|
|
|
604
|
|
|
—
|
|
|
604
|
|
||||||||||||
Balance at December 31, 2016
|
29,217
|
|
|
$
|
292
|
|
|
(420
|
)
|
|
$
|
(9,000
|
)
|
$
|
217,211
|
|
|
$
|
91,803
|
|
—
|
|
$
|
(29,724
|
)
|
|
$
|
270,582
|
|
|
$
|
162
|
|
|
$
|
270,744
|
|
|
For the Transition Period ended December 31,
|
|
For the year ended May 31,
|
||||||||||||
|
2016
|
|
2016
|
|
2015
|
|
2014
|
||||||||
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income
|
$
|
9,611
|
|
|
$
|
24,650
|
|
|
$
|
15,991
|
|
|
$
|
22,575
|
|
Adjustments to reconcile net income to net cash provided by operating activities
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
19,199
|
|
|
32,474
|
|
|
33,286
|
|
|
28,429
|
|
||||
Deferred income taxes
|
(174
|
)
|
|
240
|
|
|
(1,745
|
)
|
|
(621
|
)
|
||||
Share-based compensation expense
|
4,559
|
|
|
6,514
|
|
|
6,579
|
|
|
6,261
|
|
||||
Charges associated with the exit of foreign operations
|
—
|
|
|
—
|
|
|
2,516
|
|
|
—
|
|
||||
Fair value adjustments to contingent consideration
|
262
|
|
|
(2,066
|
)
|
|
(5,382
|
)
|
|
(3,937
|
)
|
||||
Other
|
559
|
|
|
(1,052
|
)
|
|
1,647
|
|
|
617
|
|
||||
Changes in operating assets and liabilities, net of effect of acquisitions
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts receivable
|
4,123
|
|
|
(4,999
|
)
|
|
3,982
|
|
|
(23,857
|
)
|
||||
Inventories
|
628
|
|
|
1,595
|
|
|
388
|
|
|
1,203
|
|
||||
Prepaid expenses and other current assets
|
(4,173
|
)
|
|
(1,128
|
)
|
|
(288
|
)
|
|
(4,059
|
)
|
||||
Other assets
|
(280
|
)
|
|
(684
|
)
|
|
(821
|
)
|
|
36
|
|
||||
Accounts payable
|
(3,667
|
)
|
|
254
|
|
|
(6,571
|
)
|
|
6,125
|
|
||||
Accrued expenses and other liabilities
|
(2,301
|
)
|
|
10,187
|
|
|
2,006
|
|
|
4,532
|
|
||||
Income taxes payable
|
1,913
|
|
|
2,139
|
|
|
(1,748
|
)
|
|
(431
|
)
|
||||
Net cash provided by operating activities
|
30,259
|
|
|
68,124
|
|
|
49,840
|
|
|
36,873
|
|
||||
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|||||
Purchase of property, plant and equipment
|
(9,093
|
)
|
|
(14,864
|
)
|
|
(15,104
|
)
|
|
(16,871
|
)
|
||||
Purchase of intangible assets
|
(697
|
)
|
|
(1,315
|
)
|
|
(866
|
)
|
|
(708
|
)
|
||||
Acquisition of businesses, net of cash acquired
|
(8,262
|
)
|
|
(1,743
|
)
|
|
(34,677
|
)
|
|
(21,924
|
)
|
||||
Proceeds from sale of equipment
|
678
|
|
|
1,170
|
|
|
996
|
|
|
1,498
|
|
||||
Net cash used in investing activities
|
(17,374
|
)
|
|
(16,752
|
)
|
|
(49,651
|
)
|
|
(38,005
|
)
|
||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|||||
Repayment of capital lease obligations
|
(4,490
|
)
|
|
(7,870
|
)
|
|
(8,653
|
)
|
|
(8,139
|
)
|
||||
Proceeds from borrowings of long-term debt
|
386
|
|
|
2,737
|
|
|
2,232
|
|
|
—
|
|
||||
Repayment of long-term debt
|
(11,919
|
)
|
|
(17,580
|
)
|
|
(11,457
|
)
|
|
(8,830
|
)
|
||||
Proceeds from revolver
|
48,400
|
|
|
55,800
|
|
|
110,300
|
|
|
102,880
|
|
||||
Repayments of revolver
|
(34,300
|
)
|
|
(69,600
|
)
|
|
(86,800
|
)
|
|
(81,300
|
)
|
||||
Payment of contingent consideration for business acquisitions
|
(795
|
)
|
|
(3,147
|
)
|
|
(3,213
|
)
|
|
(1,678
|
)
|
||||
Purchases of treasury stock
|
(9,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Taxes paid related to net share settlement of equity awards
|
(2,323
|
)
|
|
(1,091
|
)
|
|
(1,481
|
)
|
|
(1,007
|
)
|
||||
Excess tax benefit from share-based payment compensation
|
568
|
|
|
(170
|
)
|
|
388
|
|
|
340
|
|
||||
Proceeds from the exercise of stock options
|
604
|
|
|
543
|
|
|
750
|
|
|
996
|
|
||||
Net cash (used in) provided by financing activities
|
(12,869
|
)
|
|
(40,378
|
)
|
|
2,066
|
|
|
3,262
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(2,050
|
)
|
|
(361
|
)
|
|
(1,720
|
)
|
|
88
|
|
||||
Net change in cash and cash equivalents
|
(2,034
|
)
|
|
10,633
|
|
|
535
|
|
|
2,218
|
|
||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Beginning of period
|
21,188
|
|
|
10,555
|
|
|
10,020
|
|
|
7,802
|
|
||||
End of period
|
$
|
19,154
|
|
|
$
|
21,188
|
|
|
$
|
10,555
|
|
|
$
|
10,020
|
|
Supplemental disclosure of cash paid
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest
|
$
|
2,079
|
|
|
$
|
4,151
|
|
|
$
|
4,504
|
|
|
$
|
3,271
|
|
Income taxes
|
$
|
8,119
|
|
|
$
|
10,686
|
|
|
$
|
13,243
|
|
|
$
|
12,920
|
|
Noncash investing and financing
|
|
|
|
|
|
|
|
|
|
|
|||||
Equipment acquired through capital lease obligations
|
$
|
1,829
|
|
|
$
|
8,248
|
|
|
$
|
8,031
|
|
|
$
|
11,031
|
|
Issuance of notes payable and other debt obligations primarily related to acquisitions
|
$
|
325
|
|
|
$
|
—
|
|
|
$
|
20,480
|
|
|
$
|
336
|
|
|
For the Transition Period ended December 31,
|
|
For the year ended May 31,
|
||||||||||||
|
2016
|
|
2016
|
|
2015
|
|
2014
|
||||||||
Basic earnings per share
|
|
|
|
|
|
|
|
|
|
|
|||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income attributable to Mistras Group, Inc.
|
$
|
9,568
|
|
|
$
|
24,654
|
|
|
$
|
16,081
|
|
|
$
|
22,518
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|||||
Weighted average common shares outstanding
|
28,989
|
|
|
28,856
|
|
|
28,613
|
|
|
28,365
|
|
||||
Basic earnings per share
|
$
|
0.33
|
|
|
$
|
0.85
|
|
|
$
|
0.56
|
|
|
$
|
0.79
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income attributable to Mistras Group, Inc.
|
$
|
9,568
|
|
|
$
|
24,654
|
|
|
$
|
16,081
|
|
|
$
|
22,518
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|||||
Weighted average common shares outstanding
|
28,989
|
|
|
28,856
|
|
|
28,613
|
|
|
28,365
|
|
||||
Dilutive effect of stock options outstanding
|
791
|
|
|
712
|
|
|
719
|
|
|
775
|
|
||||
Dilutive effect of restricted stock units outstanding
|
345
|
|
|
323
|
|
|
258
|
|
|
184
|
|
||||
|
30,125
|
|
|
29,891
|
|
|
29,590
|
|
|
29,324
|
|
||||
Diluted earnings per share
|
$
|
0.32
|
|
|
$
|
0.82
|
|
|
$
|
0.54
|
|
|
$
|
0.77
|
|
|
For the Transition Period ended December 31,
|
For the year ended May 31,
|
||||||||
|
2016
|
2016
|
|
2015
|
|
2014
|
||||
Potential common stock attributable to stock options outstanding
|
—
|
|
5
|
|
|
6
|
|
|
5
|
|
Potential common stock attributable to performance awards outstanding
|
2
|
|
24
|
|
|
1
|
|
|
121
|
|
Total
|
2
|
|
29
|
|
|
7
|
|
|
126
|
|
|
December 31,
|
|
May 31,
|
||||||||
|
2016
|
|
2016
|
|
2015
|
||||||
Trade accounts receivable
|
$
|
133,704
|
|
|
$
|
140,820
|
|
|
$
|
136,208
|
|
Allowance for doubtful accounts
|
(2,852
|
)
|
|
(2,907
|
)
|
|
(2,980
|
)
|
|||
Accounts receivable, net
|
$
|
130,852
|
|
|
$
|
137,913
|
|
|
$
|
133,228
|
|
|
December 31,
|
|
May 31,
|
||||||||
|
2016
|
|
2016
|
|
2015
|
||||||
Raw materials
|
$
|
5,409
|
|
|
$
|
3,827
|
|
|
$
|
4,194
|
|
Work in progress
|
1,246
|
|
|
1,743
|
|
|
1,604
|
|
|||
Finished goods
|
1,874
|
|
|
2,839
|
|
|
3,178
|
|
|||
Services-related consumable supplies
|
1,488
|
|
|
1,509
|
|
|
1,865
|
|
|||
Inventory
|
$
|
10,017
|
|
|
$
|
9,918
|
|
|
$
|
10,841
|
|
|
|
December 31,
|
|
May 31,
|
||||||||
|
Useful Life
|
2016
|
|
2016
|
|
2015
|
||||||
|
(Years)
|
|
|
|
|
|
||||||
Land
|
|
$
|
1,714
|
|
|
$
|
1,735
|
|
|
$
|
1,856
|
|
Building and improvements
|
30-40
|
19,261
|
|
|
19,364
|
|
|
17,712
|
|
|||
Office furniture and equipment
|
5-8
|
9,069
|
|
|
8,692
|
|
|
7,934
|
|
|||
Machinery and equipment
|
5-7
|
169,928
|
|
|
173,053
|
|
|
162,762
|
|
|||
|
|
199,972
|
|
|
202,844
|
|
|
190,264
|
|
|||
Accumulated depreciation and amortization
|
|
(126,823
|
)
|
|
(124,168
|
)
|
|
(111,008
|
)
|
|||
Property, plant and equipment, net
|
|
$
|
73,149
|
|
|
$
|
78,676
|
|
|
$
|
79,256
|
|
|
Transition Period
|
2016
|
|
2015
|
||||||
Number of entities
|
3
|
|
2
|
|
|
4
|
|
|||
|
|
|
|
|
||||||
Cash paid
|
$
|
8,295
|
|
$
|
1,784
|
|
|
$
|
35,755
|
|
Notes payable
|
325
|
|
—
|
|
|
20,505
|
|
|||
Contingent consideration
|
1,630
|
|
991
|
|
|
2,255
|
|
|||
Consideration paid
|
$
|
10,250
|
|
$
|
2,775
|
|
|
$
|
58,515
|
|
|
|
|
|
|
||||||
Current net assets
|
$
|
1,632
|
|
$
|
180
|
|
|
$
|
2,770
|
|
Debt and other long-term liabilities
|
(214
|
)
|
(546
|
)
|
|
(5,889
|
)
|
|||
Property, plant and equipment
|
953
|
|
485
|
|
|
7,395
|
|
|||
Deferred tax asset (liability)
|
392
|
|
(72
|
)
|
|
(2,467
|
)
|
|||
Intangibles
|
3,367
|
|
—
|
|
|
10,394
|
|
|||
Goodwill
|
4,120
|
|
2,728
|
|
|
46,312
|
|
|||
Net assets acquired
|
$
|
10,250
|
|
$
|
2,775
|
|
|
$
|
58,515
|
|
|
For the Transition Period ended December 31,
|
For the year ended May 31,
|
||||||||||||
|
2016
|
2016
|
|
2015
|
|
2014
|
||||||||
Due diligence, professional fees and other transaction costs
|
$
|
231
|
|
$
|
629
|
|
|
$
|
215
|
|
|
$
|
1,280
|
|
Adjustments to fair value of contingent consideration liabilities
|
$
|
265
|
|
$
|
(2,082
|
)
|
|
$
|
(5,382
|
)
|
|
$
|
(3,937
|
)
|
Acquisition-related (benefit) expense, net
|
$
|
496
|
|
$
|
(1,453
|
)
|
|
$
|
(5,167
|
)
|
|
$
|
(2,657
|
)
|
|
Services
|
|
International
|
|
Products
|
|
Total
|
||||||||
Balance at May 31, 2014
|
$
|
73,767
|
|
|
$
|
43,552
|
|
|
$
|
13,197
|
|
|
$
|
130,516
|
|
Goodwill acquired during the year
|
41,986
|
|
|
1,480
|
|
|
—
|
|
|
43,466
|
|
||||
Adjustments to preliminary purchase price allocations
|
3,529
|
|
|
(367
|
)
|
|
—
|
|
|
3,162
|
|
||||
Foreign currency translation
|
(2,003
|
)
|
|
(8,727
|
)
|
|
—
|
|
|
(10,730
|
)
|
||||
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
|
4,120
|
|
|
—
|
|
|
—
|
|
|
4,120
|
|
||||
Adjustments to preliminary purchase price allocations
|
(19
|
)
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
||||
Foreign currency translation
|
(392
|
)
|
|
(2,989
|
)
|
|
—
|
|
|
(3,381
|
)
|
||||
Balance at December 31, 2016
|
$
|
123,392
|
|
|
$
|
33,351
|
|
|
$
|
13,197
|
|
|
$
|
169,940
|
|
|
|
|
December 31,
|
|||||||||||
|
|
|
2016
|
|
||||||||||
|
Useful Life
(Years)
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
||||||
Customer relationships
|
5-12
|
|
$
|
81,559
|
|
|
$
|
(50,417
|
)
|
|
$
|
31,142
|
|
|
Software/Technology
|
3-15
|
|
18,128
|
|
|
(12,577
|
)
|
|
5,551
|
|
|
|||
Covenants not to compete
|
2-5
|
|
11,143
|
|
|
(9,647
|
)
|
|
1,496
|
|
|
|||
Other
|
2-5
|
|
7,266
|
|
|
(5,448
|
)
|
|
1,818
|
|
|
|||
Total
|
|
|
$
|
118,096
|
|
|
$
|
(78,089
|
)
|
|
$
|
40,007
|
|
|
|
|
|
May 31,
|
||||||||||||||||||||||
|
|
|
2016
|
|
2015
|
||||||||||||||||||||
|
Useful Life
(Years)
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
Customer relationships
|
5-12
|
|
$
|
81,262
|
|
|
$
|
(47,747
|
)
|
|
$
|
33,515
|
|
|
$
|
81,101
|
|
|
$
|
(41,009
|
)
|
|
$
|
40,092
|
|
Software/Technology
|
3-15
|
|
17,539
|
|
|
(11,855
|
)
|
|
5,684
|
|
|
15,738
|
|
|
(10,290
|
)
|
|
5,448
|
|
||||||
Covenants not to compete
|
2-5
|
|
10,791
|
|
|
(9,290
|
)
|
|
1,501
|
|
|
11,678
|
|
|
(8,605
|
)
|
|
3,073
|
|
||||||
Other
|
2-5
|
|
7,827
|
|
|
(5,035
|
)
|
|
2,792
|
|
|
6,910
|
|
|
(4,247
|
)
|
|
2,663
|
|
||||||
Total
|
|
|
$
|
117,419
|
|
|
$
|
(73,927
|
)
|
|
$
|
43,492
|
|
|
$
|
115,427
|
|
|
$
|
(64,151
|
)
|
|
$
|
51,276
|
|
|
Expected
Amortization
Expense
|
||
|
|
|
|
2017
|
$
|
8,230
|
|
2018
|
6,783
|
|
|
2019
|
5,572
|
|
|
2020
|
4,364
|
|
|
2021
|
4,040
|
|
|
Thereafter
|
11,018
|
|
|
Total
|
$
|
40,007
|
|
|
December 31,
|
|
May 31,
|
||||||||
|
2016
|
|
2016
|
|
2015
|
||||||
Accrued salaries, wages and related employee benefits
|
$
|
23,442
|
|
|
$
|
31,566
|
|
|
$
|
26,053
|
|
Contingent consideration
|
1,826
|
|
|
1,029
|
|
|
3,543
|
|
|||
Accrued workers' compensation and health benefits
|
6,351
|
|
|
4,834
|
|
|
3,630
|
|
|||
Deferred revenues
|
3,743
|
|
|
3,332
|
|
|
3,841
|
|
|||
Legal settlement accrual
|
6,320
|
|
|
6,320
|
|
|
—
|
|
|||
Other accrued expenses
|
17,015
|
|
|
15,902
|
|
|
18,847
|
|
|||
Total accrued expenses and other current liabilities
|
$
|
58,697
|
|
|
$
|
62,983
|
|
|
$
|
55,914
|
|
|
December 31,
|
|
May 31,
|
||||||||
|
2016
|
|
2016
|
|
2015
|
||||||
Senior credit facility
|
$
|
82,776
|
|
|
$
|
68,999
|
|
|
$
|
83,062
|
|
Notes payable
|
320
|
|
|
10,111
|
|
|
24,632
|
|
|||
Other
|
4,200
|
|
|
5,899
|
|
|
5,765
|
|
|||
Total debt
|
87,296
|
|
|
85,009
|
|
|
113,459
|
|
|||
Less: Current portion
|
(1,379
|
)
|
|
(12,553
|
)
|
|
(17,902
|
)
|
|||
Long-term debt, net of current portion
|
$
|
85,917
|
|
|
$
|
72,456
|
|
|
$
|
95,557
|
|
2017
|
$
|
1,379
|
|
2018
|
881
|
|
|
2019
|
83,494
|
|
|
2020
|
411
|
|
|
2021
|
194
|
|
|
Thereafter
|
937
|
|
|
Total
|
$
|
87,296
|
|
|
December 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,094
|
|
|
$
|
3,094
|
|
Total Liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,094
|
|
|
$
|
3,094
|
|
|
May 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,075
|
|
|
$
|
2,075
|
|
Total Liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,075
|
|
|
$
|
2,075
|
|
|
May 31, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,411
|
|
|
$
|
6,411
|
|
Total Liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,411
|
|
|
$
|
6,411
|
|
|
For the Transition Period ended December 31,
|
For the year ended May 31,
|
||||||||||||
|
2016
|
2016
|
|
2015
|
|
2014
|
||||||||
Cash proceeds from options exercised
|
$
|
604
|
|
$
|
543
|
|
|
$
|
750
|
|
|
$
|
996
|
|
Aggregate intrinsic value of options exercised
|
993
|
|
658
|
|
|
563
|
|
|
1,247
|
|
|
For the Transition Period ended December 31,
|
|
For the year ended May 31,
|
||||||||||||||||||||||||
|
2016
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||||||||||
|
Common
Stock
Options
|
|
Weighted
Average
Exercise
Price
|
|
Common
Stock
Options
|
|
Weighted
Average
Exercise
Price
|
|
Common
Stock
Options
|
|
Weighted
Average
Exercise
Price
|
|
Common
Stock
Options
|
|
Weighted
Average
Exercise
Price
|
||||||||||||
Outstanding at beginning of year:
|
2,232
|
|
|
$
|
13.21
|
|
|
2,287
|
|
|
$
|
13.13
|
|
|
2,352
|
|
|
$
|
13.09
|
|
|
2,464
|
|
|
$
|
12.93
|
|
Granted
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Exercised
|
(65
|
)
|
|
$
|
9.27
|
|
|
(55
|
)
|
|
$
|
9.87
|
|
|
(65
|
)
|
|
$
|
11.54
|
|
|
(103
|
)
|
|
$
|
9.67
|
|
Expired or forfeited
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
(9
|
)
|
|
$
|
10.03
|
|
Outstanding at end of year:
|
2,167
|
|
|
$
|
13.33
|
|
|
2,232
|
|
|
$
|
13.21
|
|
|
2,287
|
|
|
$
|
13.13
|
|
|
2,352
|
|
|
$
|
13.09
|
|
|
|
|
|
For the Transition Period ended December 31, 2016
|
||||||||||||||
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Range of Exercise Prices
|
|
Total
Options
Outstanding
|
|
Weighted
Average
Remaining
Life (Years)
|
|
Weighted
Average
Exercise
Price
|
|
Number
Exercisable
|
|
Weighted
Average
Exercise
Price
|
||||||||
$6.15-$11.54
|
|
72
|
|
|
1.5
|
|
$
|
8.93
|
|
|
72
|
|
|
$
|
8.93
|
|
||
$13.46-$22.35
|
|
2,095
|
|
|
2.7
|
|
$
|
13.48
|
|
|
2,095
|
|
|
$
|
13.48
|
|
||
|
|
2,167
|
|
|
|
|
|
|
|
2,167
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Aggregate Intrinsic Value
|
|
$
|
26,760
|
|
|
|
|
|
|
|
$
|
26,760
|
|
|
|
|
|
For the transition period ended December 31,
|
|
For the year ended May 31,
|
||||||||||||||||||||||||
|
2016
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||||||||||
|
Units
|
|
Weighted
Average Grant-Date Fair Value |
|
Units
|
|
Weighted
Average
Grant-Date
Fair Value
|
|
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
|
|
|
628
|
|
|
$
|
19.37
|
|
|
555
|
|
|
$
|
18.77
|
|
Granted
|
219
|
|
|
$
|
24.48
|
|
|
264
|
|
|
$
|
16.73
|
|
|
192
|
|
|
$
|
21.87
|
|
|
295
|
|
|
$
|
19.51
|
|
Released
|
(207
|
)
|
|
$
|
19.40
|
|
|
(223
|
)
|
|
$
|
20.40
|
|
|
(232
|
)
|
|
$
|
18.17
|
|
|
(178
|
)
|
|
$
|
17.70
|
|
Forfeited
|
(18
|
)
|
|
$
|
19.55
|
|
|
(30
|
)
|
|
$
|
19.26
|
|
|
(24
|
)
|
|
$
|
20.57
|
|
|
(44
|
)
|
|
$
|
19.67
|
|
Outstanding at end of period:
|
569
|
|
|
$
|
20.81
|
|
|
575
|
|
|
$
|
18.85
|
|
|
564
|
|
|
$
|
20.47
|
|
|
628
|
|
|
$
|
19.37
|
|
|
For the Transition Period ended December 31, 2016
|
|||||
|
Units
|
|
Weighted
Average Grant-Date Fair Value |
|||
Outstanding at beginning of period:
|
328
|
|
|
$
|
17.02
|
|
Granted
|
105
|
|
|
$
|
24.90
|
|
Performance condition adjustments, net
|
(54
|
)
|
|
$
|
24.49
|
|
Released
|
(89
|
)
|
|
$
|
24.50
|
|
Forfeited
|
—
|
|
|
$
|
—
|
|
Outstanding at end of period:
|
290
|
|
|
$
|
16.01
|
|
|
For the Transition Period ended December 31,
|
|
For the year ended May 31,
|
||||||||||||
|
2016
|
|
2016
|
|
2015
|
|
2014
|
||||||||
Income (loss) before provision for income taxes from:
|
|
|
|
|
|
|
|
|
|
|
|||||
U.S. operations
|
$
|
5,116
|
|
|
$
|
27,772
|
|
|
$
|
26,893
|
|
|
$
|
25,433
|
|
Foreign operations
|
10,365
|
|
|
10,643
|
|
|
(1,162
|
)
|
|
9,670
|
|
||||
Earnings before income taxes
|
$
|
15,481
|
|
|
$
|
38,415
|
|
|
$
|
25,731
|
|
|
$
|
35,103
|
|
|
For the Transition Period ended December 31,
|
|
For the year ended May 31,
|
||||||||||||
|
2016
|
|
2016
|
|
2015
|
|
2014
|
||||||||
Current
|
|
|
|
|
|
|
|
|
|
|
|||||
Federal
|
$
|
1,990
|
|
|
$
|
9,156
|
|
|
$
|
8,489
|
|
|
$
|
8,836
|
|
States and local
|
483
|
|
|
1,537
|
|
|
1,177
|
|
|
1,689
|
|
||||
Foreign
|
3,569
|
|
|
3,672
|
|
|
1,493
|
|
|
2,484
|
|
||||
Reserve for uncertain tax positions
|
(39
|
)
|
|
(529
|
)
|
|
(48
|
)
|
|
59
|
|
||||
Total current
|
6,003
|
|
|
13,836
|
|
|
11,111
|
|
|
13,068
|
|
||||
Deferred
|
|
|
|
|
|
|
|
|
|
|
|||||
Federal
|
6
|
|
|
82
|
|
|
(145
|
)
|
|
(53
|
)
|
||||
States and local
|
(28
|
)
|
|
(51
|
)
|
|
(126
|
)
|
|
395
|
|
||||
Foreign
|
(514
|
)
|
|
(557
|
)
|
|
(2,416
|
)
|
|
(967
|
)
|
||||
Total deferred
|
(536
|
)
|
|
(526
|
)
|
|
(2,687
|
)
|
|
(625
|
)
|
||||
Net change in valuation allowance
|
403
|
|
|
455
|
|
|
1,316
|
|
|
85
|
|
||||
Net deferred
|
(133
|
)
|
|
(71
|
)
|
|
(1,371
|
)
|
|
(540
|
)
|
||||
Provision for income taxes
|
$
|
5,870
|
|
|
$
|
13,765
|
|
|
$
|
9,740
|
|
|
$
|
12,528
|
|
|
For the Transition period ended December 31,
|
|||||
|
2016
|
|||||
Federal tax at statutory rate
|
$
|
5,418
|
|
|
35.0
|
%
|
State taxes, net of federal benefit
|
296
|
|
|
1.9
|
%
|
|
Foreign tax
|
(573
|
)
|
|
(3.7
|
)%
|
|
Contingent consideration
|
(4
|
)
|
|
—
|
%
|
|
Permanent differences
|
373
|
|
|
2.4
|
%
|
|
Other
|
(43
|
)
|
|
(0.3
|
)%
|
|
Change in valuation allowance
|
403
|
|
|
2.6
|
%
|
|
Total provision for income taxes
|
$
|
5,870
|
|
|
37.9
|
%
|
|
For the year ended May 31,
|
|||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
Federal tax at statutory rate
|
$
|
13,445
|
|
|
35.0
|
%
|
|
$
|
9,006
|
|
|
35.0
|
%
|
|
$
|
12,286
|
|
|
35.0
|
%
|
State taxes, net of federal benefit
|
966
|
|
|
2.5
|
%
|
|
683
|
|
|
2.7
|
%
|
|
1,355
|
|
|
3.9
|
%
|
|||
Foreign tax
|
(610
|
)
|
|
(1.6
|
)%
|
|
(517
|
)
|
|
(2.0
|
)%
|
|
(1,868
|
)
|
|
(5.3
|
)%
|
|||
Contingent consideration
|
(425
|
)
|
|
(1.1
|
)%
|
|
(914
|
)
|
|
(3.6
|
)%
|
|
24
|
|
|
0.1
|
%
|
|||
Permanent differences
|
245
|
|
|
0.6
|
%
|
|
196
|
|
|
0.8
|
%
|
|
531
|
|
|
1.5
|
%
|
|||
Other
|
(311
|
)
|
|
(0.8
|
)%
|
|
(30
|
)
|
|
(0.1
|
)%
|
|
115
|
|
|
0.3
|
%
|
|||
Change in valuation allowance
|
455
|
|
|
1.2
|
%
|
|
1,316
|
|
|
5.1
|
%
|
|
85
|
|
|
0.2
|
%
|
|||
Total provision for income taxes
|
$
|
13,765
|
|
|
35.8
|
%
|
|
$
|
9,740
|
|
|
37.9
|
%
|
|
$
|
12,528
|
|
|
35.7
|
%
|
|
December 31,
|
|
May 31,
|
||||||||
|
2016
|
|
2016
|
|
2015
|
||||||
Deferred income tax assets
|
|
|
|
|
|
|
|
||||
Allowance for doubtful accounts
|
$
|
969
|
|
|
$
|
940
|
|
|
$
|
1,036
|
|
Inventory
|
236
|
|
|
518
|
|
|
796
|
|
|||
Intangible assets
|
2,529
|
|
|
1,641
|
|
|
1,254
|
|
|||
Accrued expenses
|
5,157
|
|
|
4,668
|
|
|
3,455
|
|
|||
Net operating loss carryforward
|
4,094
|
|
|
4,036
|
|
|
4,738
|
|
|||
Capital lease obligations
|
1,140
|
|
|
1,167
|
|
|
379
|
|
|||
Capital losses
|
719
|
|
|
719
|
|
|
—
|
|
|||
Deferred share-based compensation
|
5,802
|
|
|
6,477
|
|
|
6,241
|
|
|||
Other
|
285
|
|
|
440
|
|
|
370
|
|
|||
Deferred income tax assets
|
20,931
|
|
|
20,606
|
|
|
18,269
|
|
|||
Valuation allowance
|
(3,896
|
)
|
|
(3,397
|
)
|
|
(3,238
|
)
|
|||
Net deferred income tax assets
|
17,035
|
|
|
17,209
|
|
|
15,031
|
|
|||
Deferred income tax liabilities
|
|
|
|
|
|
|
|
||||
Property and equipment
|
(8,655
|
)
|
|
(9,785
|
)
|
|
(8,214
|
)
|
|||
Goodwill
|
(13,586
|
)
|
|
(12,535
|
)
|
|
(10,728
|
)
|
|||
Intangible assets
|
(5,051
|
)
|
|
(5,989
|
)
|
|
(6,677
|
)
|
|||
Other
|
(11
|
)
|
|
(12
|
)
|
|
(44
|
)
|
|||
Deferred income tax liabilities
|
(27,303
|
)
|
|
(28,321
|
)
|
|
(25,663
|
)
|
|||
Net deferred income taxes
|
$
|
(10,268
|
)
|
|
$
|
(11,112
|
)
|
|
$
|
(10,632
|
)
|
|
For the Transition Period ended December 31,
|
|
For the year ended May 31,
|
||||||||
|
2016
|
|
2016
|
|
2015
|
||||||
Balance at beginning of period
|
$
|
303
|
|
|
$
|
763
|
|
|
$
|
1,016
|
|
Additions for tax positions related to the current fiscal period
|
8
|
|
|
29
|
|
|
30
|
|
|||
Additions for tax positions related to prior years
|
—
|
|
|
52
|
|
|
—
|
|
|||
Decreases for tax positions related to prior years
|
(11
|
)
|
|
(23
|
)
|
|
(1
|
)
|
|||
Impact of foreign exchange fluctuation
|
—
|
|
|
(91
|
)
|
|
(112
|
)
|
|||
Settlements
|
—
|
|
|
(29
|
)
|
|
(50
|
)
|
|||
Reductions related to the expiration of statutes of limitations
|
(33
|
)
|
|
(398
|
)
|
|
(120
|
)
|
|||
Balance at end of period
|
$
|
267
|
|
|
$
|
303
|
|
|
$
|
763
|
|
2017
|
$
|
7,033
|
|
2018
|
5,312
|
|
|
2019
|
3,008
|
|
|
2020
|
1,191
|
|
|
2021
|
556
|
|
|
Thereafter
|
88
|
|
|
Total minimum lease payments
|
17,188
|
|
|
Less: amount representing interest
|
(1,018
|
)
|
|
Present value of minimum lease payments
|
16,170
|
|
|
Less: current portion of obligations under capital leases
|
(6,488
|
)
|
|
Obligations under capital leases, net of current portion
|
$
|
9,682
|
|
2017
|
$
|
9,390
|
|
2018
|
8,068
|
|
|
2019
|
6,115
|
|
|
2020
|
4,566
|
|
|
2021
|
3,603
|
|
|
Thereafter
|
11,609
|
|
|
Total
|
$
|
43,351
|
|
•
|
Services.
This segment provides asset protection solutions predominantly in North America, with the largest concentration in the United States, 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 segments to global markets, 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.
|
|
For the Transition Period ended December 31,
|
|
For the year ended May 31,
|
||||||||||||
|
2016
|
|
2016
|
|
2015
|
|
2014
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|||||
Services
|
$
|
293,218
|
|
|
$
|
553,279
|
|
|
$
|
540,224
|
|
|
$
|
443,229
|
|
International
|
104,013
|
|
|
143,025
|
|
|
146,953
|
|
|
161,395
|
|
||||
Products and Systems
|
14,541
|
|
|
30,293
|
|
|
31,255
|
|
|
33,544
|
|
||||
Corporate and eliminations
|
(7,611
|
)
|
|
(7,416
|
)
|
|
(7,180
|
)
|
|
(14,721
|
)
|
||||
|
$
|
404,161
|
|
|
$
|
719,181
|
|
|
$
|
711,252
|
|
|
$
|
623,447
|
|
|
For the Transition Period ended December 31,
|
|
For the year ended May 31,
|
||||||||||||
|
2016
|
|
2016
|
|
2015
|
|
2014
|
||||||||
Gross profit
|
|
|
|
|
|
|
|
|
|
|
|||||
Services
|
$
|
75,784
|
|
|
$
|
145,262
|
|
|
$
|
135,201
|
|
|
$
|
114,182
|
|
International
|
34,210
|
|
|
43,613
|
|
|
34,572
|
|
|
44,893
|
|
||||
Products and Systems
|
6,920
|
|
|
14,022
|
|
|
14,314
|
|
|
14,495
|
|
||||
Corporate and eliminations
|
90
|
|
|
111
|
|
|
646
|
|
|
(627
|
)
|
||||
|
$
|
117,004
|
|
|
$
|
203,008
|
|
|
$
|
184,733
|
|
|
$
|
172,943
|
|
|
For the Transition Period ended December 31,
|
|
For the year ended May 31,
|
||||||||||||
|
2016
|
|
2016
|
|
2015
|
|
2014
|
||||||||
Income from operations
|
|
|
|
|
|
|
|
|
|
|
|||||
Services
|
$
|
22,411
|
|
|
$
|
52,552
|
|
|
$
|
49,142
|
|
|
$
|
43,221
|
|
International
|
10,597
|
|
|
9,293
|
|
|
(575
|
)
|
|
10,238
|
|
||||
Products and Systems
|
(254
|
)
|
|
2,688
|
|
|
2,461
|
|
|
2,552
|
|
||||
Corporate and eliminations
|
(15,221
|
)
|
|
(21,356
|
)
|
|
(20,675
|
)
|
|
(17,716
|
)
|
||||
|
$
|
17,533
|
|
|
$
|
43,177
|
|
|
$
|
30,353
|
|
|
$
|
38,295
|
|
|
For the Transition Period ended December 31,
|
|
For the year ended May 31,
|
||||||||||||
|
2016
|
|
2016
|
|
2015
|
|
2014
|
||||||||
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|||||
Services
|
$
|
12,765
|
|
|
$
|
22,725
|
|
|
$
|
22,268
|
|
|
$
|
17,794
|
|
International
|
5,306
|
|
|
7,774
|
|
|
8,451
|
|
|
8,065
|
|
||||
Products and Systems
|
1,372
|
|
|
2,323
|
|
|
2,426
|
|
|
2,373
|
|
||||
Corporate and eliminations
|
(244
|
)
|
|
(348
|
)
|
|
141
|
|
|
197
|
|
||||
|
$
|
19,199
|
|
|
$
|
32,474
|
|
|
$
|
33,286
|
|
|
$
|
28,429
|
|
|
December 31,
|
|
May 31,
|
||||||||
|
2016
|
|
2016
|
|
2015
|
||||||
Intangible assets, net
|
|
|
|
|
|
|
|
||||
Services
|
$
|
19,550
|
|
|
$
|
19,022
|
|
|
$
|
24,598
|
|
International
|
14,139
|
|
|
17,703
|
|
|
19,482
|
|
|||
Products and Systems
|
5,482
|
|
|
6,054
|
|
|
7,004
|
|
|||
Corporate and eliminations
|
836
|
|
|
713
|
|
|
192
|
|
|||
|
$
|
40,007
|
|
|
$
|
43,492
|
|
|
$
|
51,276
|
|
|
December 31,
|
|
May 31,
|
||||||||
|
2016
|
|
2016
|
|
2015
|
||||||
Total assets
|
|
|
|
|
|
|
|
||||
Services
|
$
|
291,539
|
|
|
$
|
301,678
|
|
|
$
|
301,031
|
|
International
|
130,427
|
|
|
132,643
|
|
|
126,643
|
|
|||
Products and Systems
|
28,964
|
|
|
31,596
|
|
|
35,464
|
|
|||
Corporate and eliminations
|
18,497
|
|
|
16,758
|
|
|
8,589
|
|
|||
|
$
|
469,427
|
|
|
$
|
482,675
|
|
|
$
|
471,727
|
|
|
For the Transition Period ended December 31,
|
|
For the year ended May 31,
|
||||||||||||
|
2016
|
|
2016
|
|
2015
|
|
2014
|
||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|||||
United States
|
$
|
256,926
|
|
|
$
|
519,361
|
|
|
$
|
491,818
|
|
|
$
|
403,001
|
|
Other Americas
|
41,777
|
|
|
67,809
|
|
|
68,628
|
|
|
55,120
|
|
||||
Europe
|
91,847
|
|
|
118,566
|
|
|
137,071
|
|
|
143,931
|
|
||||
Asia-Pacific
|
13,611
|
|
|
13,445
|
|
|
13,735
|
|
|
21,395
|
|
||||
|
$
|
404,161
|
|
|
$
|
719,181
|
|
|
$
|
711,252
|
|
|
$
|
623,447
|
|
|
December 31,
|
|
May 31,
|
||||||||
|
2016
|
|
2016
|
|
2015
|
||||||
Long-lived assets
|
|
|
|
|
|
|
|
||||
United States
|
$
|
186,960
|
|
|
$
|
186,543
|
|
|
$
|
190,997
|
|
Other Americas
|
29,065
|
|
|
29,743
|
|
|
31,558
|
|
|||
Europe
|
67,072
|
|
|
75,102
|
|
|
73,744
|
|
|||
Asia-Pacific
|
—
|
|
|
—
|
|
|
647
|
|
|||
|
$
|
283,097
|
|
|
$
|
291,388
|
|
|
$
|
296,946
|
|
|
|
Seven Months Ended December 31, 2015
|
||
|
|
(unaudited)
|
||
Revenues
|
|
$
|
427,913
|
|
Cost of revenues
|
|
292,718
|
|
|
Depreciation
|
|
12,005
|
|
|
Gross profit
|
|
123,190
|
|
|
Selling, general and administrative expenses
|
|
81,117
|
|
|
Research and engineering
|
|
1,431
|
|
|
Depreciation and amortization
|
|
6,503
|
|
|
Acquisition-related benefit, net
|
|
(959
|
)
|
|
Income from operations
|
|
35,098
|
|
|
Interest expense, net
|
|
3,672
|
|
|
Income before provision for income taxes
|
|
31,426
|
|
|
Provision for income taxes
|
|
11,627
|
|
|
Net Income
|
|
19,799
|
|
|
Less: Net (loss) attributable to non-controlling interests
|
|
(15
|
)
|
|
Net income available to Mistras Group, Inc. shareholders
|
|
$
|
19,814
|
|
Net income per share: Basic
|
|
$
|
0.69
|
|
Net income per share: Diluted
|
|
$
|
0.67
|
|
Weighted average shares outstanding:
|
|
|
||
Basic
|
|
28,810
|
|
|
Diluted
|
|
29,676
|
|
Fiscal quarter ended
|
|
November 30, 2016
|
|
August 31, 2016
|
|
May 31,
2016 |
|
February 29,
2016 |
|
November 30, 2015
|
|
August 31, 2015
|
|
May 31,
2015 |
|
February 28,
2015 |
|
November 30, 2014
|
|
August 31, 2014
|
||||||||||||||||||||
Revenues
|
|
$
|
176,642
|
|
|
$
|
168,443
|
|
|
$
|
184,187
|
|
|
$
|
160,355
|
|
|
$
|
194,786
|
|
|
$
|
179,853
|
|
|
$
|
174,686
|
|
|
$
|
163,100
|
|
|
$
|
206,893
|
|
|
$
|
166,573
|
|
Gross Profit
|
|
52,076
|
|
|
50,056
|
|
|
52,000
|
|
|
42,809
|
|
|
56,925
|
|
|
51,274
|
|
|
44,966
|
|
|
38,734
|
|
|
59,039
|
|
|
41,994
|
|
||||||||||
Income from operations
|
|
12,508
|
|
|
11,155
|
|
|
4,918
|
|
|
5,758
|
|
|
19,569
|
|
|
12,932
|
|
|
4,627
|
|
|
3,870
|
|
|
18,192
|
|
|
3,664
|
|
||||||||||
Net income attributable to Mistras Group, Inc.
|
|
$
|
7,270
|
|
|
$
|
6,596
|
|
|
$
|
2,764
|
|
|
$
|
3,593
|
|
|
$
|
11,425
|
|
|
$
|
6,872
|
|
|
$
|
2,171
|
|
|
$
|
1,817
|
|
|
$
|
10,427
|
|
|
$
|
1,666
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
|
$
|
0.25
|
|
|
$
|
0.23
|
|
|
$
|
0.10
|
|
|
$
|
0.12
|
|
|
$
|
0.40
|
|
|
$
|
0.24
|
|
|
$
|
0.08
|
|
|
$
|
0.06
|
|
|
$
|
0.36
|
|
|
$
|
0.06
|
|
Diluted
|
|
$
|
0.24
|
|
|
$
|
0.22
|
|
|
$
|
0.09
|
|
|
$
|
0.12
|
|
|
$
|
0.39
|
|
|
$
|
0.23
|
|
|
$
|
0.07
|
|
|
$
|
0.06
|
|
|
$
|
0.35
|
|
|
$
|
0.06
|
|
Plan Category
|
|
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options
|
|
Weighted Average
Exercise Price of
Outstanding Options
|
|
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
|
||||
|
|
(in thousands, except exercise price data)
|
||||||||
Equity Compensation Plans Approved by Security Holders (1)
|
|
2,167
|
|
|
$
|
13.33
|
|
|
1,700
|
|
|
|
|
|
|
|
|
||||
Equity Compensation Plans Not Approved by Security Holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
||||
Total
|
|
2,167
|
|
|
$
|
13.33
|
|
|
1,700
|
|
|
Page
|
|
50
|
|
|
51
|
|
|
52
|
|
|
53
|
|
|
54
|
|
|
55
|
|
|
56
|
|
Exhibit No.
|
|
Description
|
3.1
|
|
Second Amended and Restated Certificate of Incorporation (filed as exhibit 3.1 to Registration Statement on Form S-1 (Amendment No. 4) filed on September 21, 2009 (Registration No. 333-151559) and incorporated herein by reference)
|
|
|
|
3.2
|
|
Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation (filed as exhibit 3.1 to the Quarterly Report on Form 10-Q filed on January 11, 2017 and incorporated herein by reference)
|
|
|
|
3.3
|
|
Amended and Restated Bylaws, effective July 20, 2016 (filed as exhibit 3.1 to the Quarterly Report on Form 10-Q filed on October 7, 2016 and incorporated herein by reference)
|
|
|
|
4.1
|
|
Specimen certificate evidencing shares of common stock (filed as exhibit 4.1 to Registration Statement on Form S-1 (Amendment No. 5) filed on September 23, 2009 (Registration No. 333-151559) and incorporated herein by reference.
|
|
|
|
10.1
|
|
Third Amended and Restated Credit Agreement dated December 21, 2011 (filed as exhibit 10.1 to Quarterly Report on Form 10-Q filed April 9, 2012 and incorporated herein by reference)
|
|
|
|
10.2
|
|
Third Amendment and Modification Agreement, dated October 31, 2014 to the Third Amended and Restated Credit Agreement, dated December 21, 2011 (filed as exhibit 10.1 to Quarterly Report on Form 10-Q filed January 9, 2015 and incorporated herein by reference)
|
|
|
|
10.3
|
|
Form of Indemnification Agreement for directors and officers (filed as exhibit 10.1 to Registration Statement on Form S-1 (Amendment No. 4) filed on September 21, 2009 (Registration No. 333-151559) and incorporated herein by reference)
|
|
|
|
10.4
|
|
Agreement, dated August 17, 2016, between registrant and Sotirios Vahaviolos (filed as exhibit 10.1 to the Quarterly Report on Form 10-Q filed on October 7, 2016 and incorporated herein by reference)
|
|
|
|
10.5
|
|
Joint stipulation of settlement and release between Registrant and Plantiffs, with respect to
Visceral and Kruger, et al. v. Mistras Group, Inc., et al.
(filed as exhibit 10.2 to the Quarterly Report on Form 10-Q filed on October 7, 2016 and incorporated herein by reference)
|
|
|
|
10.6
|
|
Employment Agreement between the Company and Sotirios J. Vahaviolos (filed as exhibit 10.4 to Registration Statement on Form S-1 (Amendment No. 4) filed on September 21, 2009 (Registration No. 333-151559) and incorporated herein by reference)
|
|
|
|
10.7
|
|
Amendment, dated July 14, 2010 to Employment Agreement, between the Company and Sotirios J. Vahaviolos (filed as exhibit 10.1 to Quarterly Report on Form 10-Q filed on October 14, 2010 and incorporated herein by reference)
|
|
|
|
10.8
|
|
Amendment No. 2, dated January 24, 2014, to Employment Agreement between the Company and Sotirios J. Vahaviolos (filed as exhibit 10.1 to Quarterly Report on Form 10-Q filed on April 9, 2014 and incorporated herein by reference)
|
|
|
|
10.9
|
|
2007 Stock Option Plan and form of Stock Option Agreement (filed as exhibit 10.5 to Registration Statement on Form S-1 (Amendment No. 4) filed on September 21, 2009 (Registration No. 333-151559) and incorporated herein by reference)
|
|
|
|
10.10
|
|
2009 Long-Term Incentive Plan (filed as exhibit 10.6 to Registration Statement on Form S-1 (Amendment No. 4) filed on September 21, 2009 (Registration No. 333-151559) and incorporated herein by reference).
|
|
|
|
10.11
|
|
Form of 2009 Long-Term Incentive Plan Stock Option Agreement (filed as exhibit 10.7 to Registration Statement on Form S-1 (Amendment No. 4) filed on September 21, 2009 (Registration No. 333-151559) and incorporated herein by reference)
|
|
|
|
10.12
|
|
Form of 2009 Long-Term Incentive Plan Restricted Stock Agreement (filed as exhibit 10.8 to Registration Statement on Form S-1 (Amendment No. 4) filed on September 21, 2009 (Registration No. 333-151559) and incorporated herein by reference)
|
|
|
|
10.13
|
|
Form of Restricted Stock Unit Certificate for awards under 2009 Long-Term Incentive Plan (filed as exhibit 10.1 to Quarterly Report on Form 10-Q filed on January 13, 2011 and incorporated herein by reference)
|
|
|
|
10.14
|
|
Form of performance share unit awards letter under 2009 Long-Term Incentive Plan (filed as exhibit 10.11 to Annual Report on Form 10-K filed on August 8, 2014 and incorporated herein by reference)
|
|
|
|
10.15
|
|
2016 Long-Term Incentive Plan (filed as exhibit B to the Definitive Proxy Statement dated September 7, 2016 and incorporated herein by reference)
|
|
|
|
10.16*
|
|
Form of Restricted Stock Unit Certificate for awards under the 2016 Long-Term Incentive Plan
|
|
|
|
10.17
|
|
Mistras Group Severance Plan as amended (April 2014) (filed as Exhibit 10.12 to Annual Report on Form 10-K filed on August 8, 2014 and incorporated herein by reference)
|
|
|
|
10.18
|
|
Description of Compensation for Non-Employee Directors (filed as exhibit 10.13 to Annual Report on Form 10-K filed on August 8, 2014 and incorporated herein by reference)
|
|
|
|
21.1*
|
|
Subsidiaries of the Registrant
|
|
|
|
23.1*
|
|
Consent of KPMG LLP
|
|
|
|
24.1*
|
|
Power of Attorney (included as part of the signature page to this report)
|
|
|
|
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
|
|
|
|
32.2**
|
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Schema Document
|
|
|
|
101.CAL
|
|
XBRL Calculation Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Labels Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Presentation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Definition Linkbase Document
|
|
MISTRAS GROUP, INC.
|
|
|
By:
|
/s/ DR. SOTIRIOS J. VAHAVIOLOS
|
|
Dr. Sotirios J. Vahaviolos
|
|
|
Chairman and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/Dr. Sotirios J. Vahaviolos
|
|
Chairman and Chief Executive
Officer
(Principal Executive Officer)
and Director
|
|
March 20, 2017
|
Dr. Sotirios J. Vahaviolos
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Jonathan H. Wolk
|
|
Senior Executive Vice President, Chief Financial
Officer and Treasurer
(Principal Financial and
Accounting Officer)
|
|
March 20, 2017
|
Jonathan H. Wolk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ James J. Forese
|
|
Director
|
|
March 20, 2017
|
James J. Forese
|
|
|
|
|
|
|
|
|
|
/s/ Richard H. Glanton
|
|
Director
|
|
March 20, 2017
|
Richard H. Glanton
|
|
|
|
|
|
|
|
|
|
/s/ Nicholas DeBenedictis
|
|
Director
|
|
March 20, 2017
|
Nicholas DeBenedictis
|
|
|
|
|
|
|
|
|
|
/s/ Michael J. Lange
|
|
Director
|
|
March 20, 2017
|
Michael J. Lange
|
|
|
|
|
|
|
|
|
|
/s/ Manuel N. Stamatakis
|
|
Director
|
|
March 20, 2017
|
Manuel N. Stamatakis
|
|
|
|
|
|
|
|
|
|
/s/ W. Curtis Weldon
|
|
Director
|
|
March 20, 2017
|
W. Curtis Weldon
|
|
|
|
|
|
|
Other Names under which
|
|
Jurisdiction of
|
Name
|
|
Subsidiary Does Business
|
|
Organization
|
Aetos Group, Inc.
|
|
|
|
Delaware
|
Carmagen Engineering International, Inc.
|
|
|
|
New Jersey
|
CISMIS Springfield Corp.
|
|
|
|
Delaware
|
Conam Inspection and Engineering Services, Inc.
|
|
|
|
Delaware
|
GMA Aeronautica S.L.U.
|
|
|
|
Germany
|
GMA Engineering GmbH
|
|
|
|
Germany
|
GMA Holding B.V.
|
|
|
|
The Netherlands
|
GMA Werkstoffprufung GmbH
|
|
|
|
Germany
|
Mistras Canada, Inc.
|
|
|
|
Canada
|
Mistras GMA Holdings GmbH
|
|
|
|
Germany
|
Mistras Group B.V.
|
|
|
|
The Netherlands
|
Mistras Group GmbH
|
|
|
|
Germany
|
Mistras Group Limited
|
|
|
|
United Kingdom
|
Mistras Group SAS
|
|
|
|
France
|
Mistras Group Hellas A.B.E.E.
|
|
|
|
Greece
|
Mistras International Holdings Inc.
|
|
|
|
Delaware
|
Mistras Quebec Holdings Inc.
|
|
|
|
Canada
|
Mistras Services Inc.
|
|
|
|
Canada
|
NDT do Brasil Ltda.
|
|
|
|
Brazil
|
Physical Acoustics Corporation
|
|
|
|
Delaware
|
Physical Acoustics India Private Ltd.
|
|
|
|
India
|
Physical Acoustics South America Ltda.
|
|
|
|
Brazil
|
Quality Services Laboratories, Inc.
|
|
|
|
Delaware
|
QSL NDT Inc.
|
|
|
|
Delaware
|
QSL Quebec Inc.
|
|
|
|
Canada
|
The Nacher Corporation
|
|
|
|
Louisiana
|
ThermTech Services, Inc.
|
|
|
|
Florida
|
|
By:
|
/s/ SOTIRIOS J. VAHAVIOLOS
|
|
|
Sotirios J. Vahaviolos
|
|
|
Chairman and Chief Executive Officer
(Principal Executive Officer)
|
|
By:
|
/s/ JONATHAN H. WOLK
|
|
|
Jonathan H. Wolk
|
|
|
Senior Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)
|
Date:
|
March 20, 2017
|
/s/ SOTIRIOS VAHAVIOLOS
|
|
|
Sotirios Vahaviolos
|
|
|
Chairman and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
Date:
|
March 20, 2017
|
/s/ JONATHAN H. WOLK
|
|
|
Jonathan H. Wolk
|
|
|
Senior Executive Vice President, Chief Financial Officer, and Treasurer
|
|
|
(Principal Financial and Accounting Officer)
|