Mistras Group, Inc. Q4 FY2025 earnings call

Highlights of fourth quarter and full year 2025 performance. Successfully executed initiatives to restart revenue growth in 2025. Aerospace and defense led growth with double-digit increase. Power generation, industrials, and infrastructure also saw growth. Laboratories business grew 661% in Q4. Full year 2025 consolidated revenue slightly up excluding lab closures. Progress on strategic plan Vision 2030: expanding share of wallet with Data Solutions business, PCMS offering grew 20.7% in 2025. Diversifying business with wins in bridge monitoring contracts, LNG terminal project, and data center business. Building operational leverage through innovative technology for timekeeping and scheduling, and strengthening sales teams.

Fourth quarter consolidated revenue grew 5.1% vs prior year. Aerospace and defense had $4.5M growth, up 21.9%; Power generation up $3.3M, 33.2% growth; Industrials and infrastructure up 6.7% and 26.8% respectively. Full year 2025 consolidated revenue $724M. Aerospace and defense, industrials, power generation, and infrastructure end markets saw revenue growth. International segment had nearly 6% revenue growth. Fourth quarter gross profit margin 28.4% (190 basis point improvement), GAAP net income $3.9M, EPS $0.12; non-GAAP net income $7.9M, EPS $0.20. Adjusted EBITDA $24.8M, up 18.2%, margin 13.7% (160 basis point improvement). Full year 2025 adjusted EBITDA $91.1M, margin 12.6%.

2026 outlook: full year revenue between $730M to $750M, adjusted EBITDA between $91M to $93M. Anticipate CapEx to be 4.5% of revenue, focus on aerospace and defense and Data Solutions AI capabilities. Expect adjusted EBITDA margins to remain resilient, net income and EPS to exceed 2025 performance. Outlook doesn't assume macro acceleration in oil and gas or acquisitions.

No specific risks detailed in the provided transcript section, but mentions forward-looking statements and risks as per SEC filings, major factors affecting results discussed in 10-K and other reports.

Q: About aerospace and defense backlog, capacity, new business; A: Good customer relationships, expanding capacity to remove constraints, winning new customers.

Q: Aerospace and defense capabilities, tuck-in acquisitions; A: Focus on organic expansion, building capabilities through CapEx.

Q: Middle East disruption impact on first quarter; A: Limited direct impact, monitoring developments.

Q: Revenue guidance range, oil and gas impact; A: Dependent on oil and gas customer spending.

Q: Gross margin improvement sources; A: Favorable revenue mix, improved pricing, operating efficiency.

Q: International profitability sustainability; A: Structural improvement, diversified platform.

Q: Oil and gas wallet share, competitive dynamics; A: Shifting to higher value integrated offerings, customers interested in digital solutions.

Q: Restructuring cost savings, revenue headwinds; A: Restructuring had cost savings, no negative revenue impact, moderating in 2026.

Q: Long-term organic growth and EBITDA margins; A: CAGR of about 5% through 2030, aspiration to reach 15% EBITDA margin.