Mistras Group, Inc. Q1 FY2025 earnings call

• Key Initiatives: Focus on leadership talent evaluation (onboarding high-caliber executives), recalibrating cost base to current revenue levels, and developing growth strategies across end markets. - Service Delivery: Reviewing operational aspects with customers to ensure fair ROI and adjusting cost base to market conditions. - Growth Strategies: Accelerating expansion in oil and gas and aerospace and defense with integrated solutions, launching PCMS Mobile and the Mistras data solution brand. - Financial Reclassification: Overhead and personnel expenses reclassified from SG&A to cost of revenue for transparency, resulting in SG&A expenses down $0.6 million from the prior year.

Oil and Gas: Revenue declined by $16.6 million, with the largest drop in the downstream sector due to turnaround timing. Aerospace and Defense: Revenue fell by $1.7 million due to macroeconomic uncertainty and supply chain disruptions. Data Solutions: PCMS offering achieved 6% revenue growth in Q1 2025. International: Revenue was up nearly 4% organically in local currency but offset by adverse foreign exchange translation.

• No full-year guidance provided for Fiscal 2025 due to market uncertainty. - Expect 2025 adjusted EBITDA to at least meet or exceed the level achieved in 2024.

• Market Uncertainty: Project delays, customer spending reductions, and impact of tariffs on business operations. - Supply Chain Disruptions: Indirect effects on customers' raw materials and production, causing temporary pauses in projects.

Q: Operating environment change since three months ago?

A: Unprecedented uncertainty due to tariffs, project delays, and customers evaluating tariff impacts.

Q: Jobs pushed to the right? Data analytics projects?

A: Data analytics (PCMS) grew 6%, but overall jobs are temporarily paused as customers evaluate tariff impacts.

Q: Tariffs affecting business?

A: Indirect impact via customers pausing projects, but long-term could benefit as advanced manufacturing moves to US.

Q: Oil price below $60 impact?

A: Primarily affects downstream business, but customers' models flex with oil prices.

Q: Midstream business weakness?

A: Due to budget restrictions, but expected to recover later in the year.

Q: Q2 comparison to Q1?

A: Q2 is easier to compare as Q1 2024 was unusually strong, so Q2 will have less volatility.

Q: Recovery of $6.5 million revenue in oil and gas?

A: Expect to recover the $6.5 million gap in the balance of the year via planned turnarounds in H2.