Mistras Group, Inc. Q4 FY2024 earnings call

• Remembrance of Dr. Sotirios J. Vahaviolos, founder, Chairman Emeritus, and Board Director. • 2024 results: Exceeded revised annual guidance, adjusted EBITDA up over 25%, adjusted EBITDA margin expanded 200 basis points, operating income highest since 2016, net income growth for fourth consecutive quarter. • Natalia Shuman's first 60 days: Engaged with customers, labs, teams; SG&A at lowest in over 5 years. • 2025 outlook: Confidence in profitable growth, focus on leadership team, strategic initiatives in data analytics, aerospace and defense, oil and gas, and field inspection.

North America segment: Fourth quarter 2024 revenue was $136.9 million, down 7.5% from prior year; gross profit was $38.9 million, with a margin of 28.4% (down 60 basis points). International segment: Fourth quarter 2024 revenue was $35 million, up 3.6% from prior year; gross profit was $10.1 million, margin 29% (up from 27.7%). Full year 2024 International segment revenue was up 9.3%, gross profit up 18.5%, margin 29.3% (up from 27%). Products & Systems segment: 2024 revenue was $13.7 million (up 5.2% from 2023); income from operations was $2.5 million (up 840% from 2023).

• Anticipate interest expense to be approximately $2 million lower in 2025 versus 2024. • Plan to release fiscal 2025 guidance after assessing FX risk and U.S. foreign tariffs. • Expect continued profitable growth, margin expansion, and EPS increase.

• Unanticipated foreign currency exchange risk due to U.S. dollar to euro exchange rate strength. • Impact of recently announced U.S. foreign tariffs on business and financial results.

Q: John Franzreb asked about customer feedback on MISTRAS and what could be better.

A: Natalia Shuman said customers are encouraged by the complete suite of offerings, excited about integrity and asset performance management solutions including software analytics, engineering services, testing, inspection.

Q: John Franzreb inquired about receivables.

A: Edward Prajzner said receivables issue is well in hand and a top priority for management.

Q: John Franzreb asked about the upcoming turnaround season.

A: Edward Prajzner said 2025 will be a normalized year in turnaround, with spring weaker and fall more robust compared to 2024.

Q: John Franzreb asked about data analytics.

A: Natalia Shuman said data analytical solutions revenue was down in 2024 due to project timing and implementation delays, but they expect growth in 2025 with PCMS software in demand.

Q: Mitchell Pinheiro asked about tariffs.

A: Edward Prajzner said it's too early to tell, they are assessing, but no impact at the moment.

Q: Mitchell Pinheiro asked about midstream business.

A: Natalia Shuman said midstream had project delays in 2024 but expects growth in 2025 due to regulatory changes driving stricter pipeline integrity requirements.

Q: Mitchell Pinheiro asked about data analytics segment.

A: Natalia Shuman said no strategic changes, they continue investments, with collaborative sales efforts.

Q: Mitchell Pinheiro asked about SG&A.

A: Edward Prajzner said the fourth quarter SG&A level is a sustainable base, with Project Phoenix discipline internalized into cost control.