Mistras Group, Inc. Q4 FY2026 earnings call

• Natalia reported Q4 consolidated revenue growth, aerospace and defense led growth, lab business grew 61% in Q4. Full year 2025 consolidated revenue up, adjusted EBITDA exceeded outlook. - Strategic plan priorities: expanding share of wallet with data solutions business, diversifying with new customers and projects, building operational leverage with innovative technology and team strengthening. - Ed discussed gross profit, SG&A expenses, income from operations, net income, cash flow, CapEx, debt, etc. - Natalia and Manny provided board perspective on 2025 performance and 2026 investment focus.

Consolidated revenue grew 5.1% in Q4 vs prior year. Aerospace and defense business had 4.5 million growth, up 21.9% y/y. Power generation up 3.3 million, 33.2% y/y. Industrials up 6.7% and infrastructure and markets up 26.8% y/y. Full year 2025 consolidated revenue $724 million, up slightly y/y excluding lab closures. Adjusted EBITDA for full year 2025 was $91.1 million, EBITDA margin 12.6%. Data solutions business PCMS offering grew 20.7% in Q4 2025 and 25.2% full year vs prior year. Infrastructure and markets grew 2.5 million or 26.8% in Q4 and 4.5 million or 13.2% full year.

• Anticipate full-year 2026 revenue to be between $730 to $750 million. - Adjusted EBITDA to be between 91 to 93 million. - Adjusted EBITDA margins to remain resilient. - Net income and EPS to exceed 2025 performance. - CapEx to remain at elevated levels in 2026 and 2027, then moderate to historical depreciation levels of about 3% of revenue. - Target debt paydown of approximately $20 million in fiscal 26 to reach a defined bank leverage ratio of approximately two times by end of fiscal 26.

• Geopolitical developments in the Middle East could impact operations, though current footprint in the region is limited. - Dependence on the oil and gas market, as a large portion of revenue still comes from it, and customers' cautious spending on CapEx could affect performance. - Elevated DSO during ERP stabilization period, higher restructuring activity, and growth-related CapEx impacted full-year free cash flow in 2025, though two factors are moderating.

Q: About aerospace and defense backlog, capacity, new business wins; A: Good customer relationships, visibility in demand, constraints being addressed by CapEx, winning new business through capabilities.

Q: Thoughts on Middle East disruption impact; A: Limited direct impact, monitoring geopolitical developments, oil price increase could positively impact.

Q: New customer wins, growth from existing vs new, margin profile; A: Expanding share of wallet with existing oil and gas customers, diversifying with new industries, higher margins in growth businesses.

Q: Q4 gross margin improvement breakdown; A: Mix, pricing discipline, operating efficiency.

Q: Oil and gas market view in 2026; A: Turnaround season not robust, customers cautious on CapEx but maintenance budgets favorable.

Q: CapEx elevation outlook; A: Elevated in 2026 and 2027, then moderate.

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

Q: Strategic accounts in oil and gas; A: More appetite for integrated offerings, shifting from commoditized services.

Q: Restructuring cost savings and revenue impact; A: Restructuring for efficiency, no negative revenue impact, cost to moderate in 2026, longer term organic growth CAGR 5% and EBITDA margin aspiration 15%