Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Feb. 28, 2015 | Apr. 01, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Mistras Group, Inc. | |
Entity Central Index Key | 1436126 | |
Document Type | 10-Q | |
Document Period End Date | 28-Feb-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -26 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 28,702,420 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q3 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Feb. 28, 2015 | 31-May-14 |
In Thousands, unless otherwise specified | ||
Current Assets | ||
Cash and cash equivalents | $13,385 | $10,020 |
Accounts receivable, net | 125,548 | 137,824 |
Inventories | 12,294 | 11,376 |
Deferred income taxes | 3,886 | 3,283 |
Prepaid expenses and other current assets | 16,309 | 12,626 |
Total current assets | 171,422 | 175,129 |
Property, plant and equipment, net | 80,125 | 77,811 |
Intangible assets, net | 56,147 | 57,875 |
Goodwill | 166,531 | 130,516 |
Deferred income taxes | 1,214 | 1,344 |
Other assets | 1,890 | 1,297 |
Total assets | 477,329 | 443,972 |
Current Liabilities | ||
Accounts payable | 8,950 | 14,978 |
Accrued expenses and other current liabilities | 47,881 | 54,650 |
Current portion of long-term debt | 16,906 | 8,058 |
Current portion of capital lease obligations | 6,859 | 7,251 |
Income taxes payable | 231 | 1,854 |
Total current liabilities | 80,827 | 86,791 |
Long-term debt, net of current portion | 109,322 | 68,590 |
Obligations under capital leases, net of current portion | 12,780 | 13,664 |
Deferred income taxes | 20,626 | 15,521 |
Other long-term liabilities | 11,686 | 17,014 |
Total liabilities | 235,241 | 201,580 |
Commitments and contingencies | ||
Equity | ||
Preferred stock, 10,000,000 shares authorized | 0 | 0 |
Common stock, $0.01 par value, 200,000,000 shares authorized | 286 | 284 |
Additional paid-in capital | 206,289 | 201,831 |
Retained earnings | 55,410 | 41,500 |
Accumulated other comprehensive loss | -20,121 | -1,511 |
Total Mistras Group, Inc. stockholders’ equity | 241,864 | 242,104 |
Noncontrolling interests | 224 | 288 |
Total equity | 242,088 | 242,392 |
Total liabilities and equity | $477,329 | $443,972 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Feb. 28, 2015 | 31-May-14 |
Statement of Financial Position [Abstract] | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Unaudited_Condensed_Consolidat
Unaudited Condensed Consolidated Statements of Income (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 |
Income Statement [Abstract] | ||||
Revenue | $163,100 | $151,727 | $536,566 | $444,320 |
Cost of revenue | 119,356 | 107,898 | 382,018 | 304,645 |
Depreciation | 5,010 | 4,529 | 14,781 | 13,121 |
Gross profit | 38,734 | 39,300 | 139,767 | 126,554 |
Selling, general and administrative expenses | 32,758 | 31,794 | 105,158 | 90,342 |
Research and engineering | 644 | 757 | 1,922 | 2,186 |
Depreciation and amortization | 3,104 | 2,771 | 9,998 | 7,729 |
Acquisition-related (benefit) expense, net | -1,642 | 978 | -3,037 | -1,530 |
Income from operations | 3,870 | 3,000 | 25,726 | 27,827 |
Interest expense | 1,161 | 792 | 3,418 | 2,309 |
Income before provision for income taxes | 2,709 | 2,208 | 22,308 | 25,518 |
Provision for income taxes | 941 | 984 | 8,457 | 9,375 |
Net income | 1,768 | 1,224 | 13,851 | 16,143 |
Less: net loss (income) attributable to noncontrolling interests, net of taxes | 49 | -23 | 59 | -44 |
Net income attributable to Mistras Group, Inc. | $1,817 | $1,201 | $13,910 | $16,099 |
Earnings per common share | ||||
Basic (in dollars per share) | $0.06 | $0.04 | $0.49 | $0.57 |
Diluted (in dollars per share) | $0.06 | $0.04 | $0.47 | $0.55 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 28,656 | 28,396 | 28,583 | 28,338 |
Diluted (in shares) | 29,529 | 29,374 | 29,559 | 29,249 |
Unaudited_Condensed_Consolidat1
Unaudited Condensed Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $1,768 | $1,224 | $13,851 | $16,143 |
Other comprehensive (loss)/income: | ||||
Foreign currency translation adjustments | -10,694 | -1,553 | -18,610 | 879 |
Comprehensive income | -8,926 | -329 | -4,759 | 17,022 |
less: comprehensive loss (income) attributable to noncontrolling interest | 49 | -23 | 59 | -44 |
Comprehensive (loss) income attributable to Mistras Group, Inc. | ($8,877) | ($352) | ($4,700) | $16,978 |
Unaudited_Condensed_Consolidat2
Unaudited Condensed Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Feb. 28, 2015 | Feb. 28, 2014 |
Cash flows from operating activities | ||
Net income | $13,851 | $16,143 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 24,779 | 20,850 |
Deferred income taxes | 2,177 | 1,987 |
Share-based compensation expense | 4,856 | 4,013 |
Fair value adjustment to contingent consideration liabilities | -3,266 | -2,414 |
Other | 520 | 106 |
Changes in operating assets and liabilities, net of effect of acquisitions of businesses: | ||
Accounts receivable | 12,207 | -13,235 |
Inventories | -735 | -21 |
Prepaid expenses and other current assets | -4,522 | -6,273 |
Other assets | -571 | -92 |
Accounts payable | -7,741 | 2,419 |
Accrued expenses and other current liabilities | -5,089 | -261 |
Income taxes payable | -2,149 | -633 |
Net cash provided by operating activities | 34,317 | 22,589 |
Cash flows from investing activities | ||
Purchase of property, plant and equipment | -11,757 | -11,661 |
Purchase of intangible assets | -581 | -465 |
Acquisition of businesses, net of cash acquired | -34,967 | -19,057 |
Proceeds from sale of equipment | 872 | 922 |
Acquisition-related deposit | 0 | 0 |
Net cash used in investing activities | -46,433 | -30,261 |
Cash flows from financing activities | ||
Repayment of capital lease obligations | -6,005 | -5,965 |
Repayment of long-term debt | -10,596 | -7,938 |
Net borrowings against revolver | 35,544 | 26,063 |
Payment of contingent consideration for business acquisitions | -3,034 | -909 |
Taxes paid related to net share settlement of share-based awards | -1,462 | -1,004 |
Excess tax benefit from share-based compensation | 382 | 292 |
Proceeds from the exercise of stock options | 682 | 712 |
Net cash provided by financing activities | 15,511 | 11,251 |
Effect of exchange rate changes on cash and cash equivalents | -30 | -1,431 |
Net change in cash and cash equivalents | 3,365 | 2,148 |
Cash and cash equivalents | ||
Beginning of period | 10,020 | 7,802 |
End of period | 13,385 | 9,950 |
Supplemental disclosure of cash paid | ||
Interest | 2,456 | 2,426 |
Income taxes | 12,388 | 11,345 |
Noncash investing and financing | ||
Equipment acquired through capital lease obligations | 5,502 | 8,140 |
Issuance of notes payable | $20,488 | $0 |
Description_of_Business_and_Ba
Description of Business and Basis of Presentation | 9 Months Ended |
Feb. 28, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation |
Description of Business | |
Mistras Group, Inc. and subsidiaries (the Company) is a leading “one source” global provider of technology-enabled asset protection solutions used to evaluate the structural integrity and reliability of critical energy, industrial and public infrastructure. The Company combines industry-leading products and technologies, expertise in mechanical integrity (MI) and non-destructive testing (NDT) services and proprietary data analysis software to deliver a comprehensive portfolio of customized solutions, ranging from routine inspections to complex, plant-wide asset integrity assessments and management. These mission critical solutions enhance customers’ ability to extend the useful life of their assets, increase productivity, minimize repair costs, comply with governmental safety and environmental regulations, manage risk and avoid catastrophic disasters. The Company serves a global customer base of companies with asset-intensive infrastructure, including companies in the oil and gas, fossil and nuclear power, alternative and renewable energy, public infrastructure, chemicals, commercial aerospace and defense, transportation, primary metals and metalworking, pharmaceutical/biotechnology and food processing industries and research and engineering institutions. | |
Basis of Presentation | |
The condensed consolidated financial statements contained in this report are unaudited. In the opinion of management, the condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods of the fiscal years ending May 31, 2015 and 2014. Reference to a fiscal year means the fiscal year ended May 31. Certain items included in these statements are based on management’s estimates. Actual results may differ from those estimates. The results of operations for any interim period are not necessarily indicative of the results expected for the year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the notes to consolidated financial statements contained in the Company’s Annual Report on Form 10-K (“Annual Report”) for fiscal 2014, as filed with the Securities and Exchange Commission on August 8, 2014. | |
Principles of Consolidation | |
The accompanying unaudited condensed consolidated financial statements include the accounts of Mistras Group, Inc. and its wholly and majority-owned subsidiaries. For subsidiaries in which the Company’s ownership interest is less than 100%, the noncontrolling interests are reported in stockholders’ equity in the accompanying consolidated balance sheets. The noncontrolling interests in net income, net of tax, is classified separately in the accompanying consolidated statements of income. | |
All significant intercompany accounts and transactions have been eliminated in consolidation. Mistras Group, Inc.’s and its subsidiaries’ fiscal years end on May 31 except for the subsidiaries in the International segment, which end on April 30. Accordingly, the Company’s International segment subsidiaries are consolidated on a one month lag. Therefore, in the quarter and year of acquisition, results of acquired subsidiaries in the International segment are generally included in consolidated results for one less month than the actual number of months from the acquisition date to the end of the reporting period. Management does not believe that any events occurred during the one-month lag period that would have a material effect on the Company’s consolidated financial statements. | |
Reclassification | |
Certain amounts in prior periods have been reclassified to conform to the current year presentation. Such reclassifications did not have a material effect on the Company’s financial condition or results of operations as previously reported. | |
Significant Accounting Policies | |
The Company’s significant accounting policies are disclosed in Note 2 — Summary of Significant Accounting Policies in the Company's Annual Report. On an ongoing basis, we evaluate its estimates and assumptions, including, among other things those related to revenue recognition, valuations of accounts receivable, long-lived assets, goodwill, deferred tax assets and uncertain tax positions. Since the date of the 2014 Annual Report, there have been no material changes to the Company's significant accounting policies. | |
Recent Accounting Pronouncements | |
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2016. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company is currently evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. | |
In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period. This ASU requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. ASU 2014-12 is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2015. The Company is currently evaluating the effect that ASU 2014-12 will have on its consolidated financial statements and related disclosures. | |
In February 2015, the Financial Accounting Standards Board issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidations Analysis, which changes the guidance for evaluating whether to consolidate certain legal entities. Specifically, the amendments modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities ("VIEs") or voting interest entities. Further, the amendments eliminate the presumption that a general partner should consolidate a limited partnership, as well as affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. The updated guidance is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2015. Early adoption is permitted. Companies have an option of using either a full retrospective or modified retrospective adoption approach. The Company is evaluating the effect that ASU 2015-02 will have on its consolidated financial statements and related disclosures. |
ShareBased_Compensation
Share-Based Compensation | 9 Months Ended |
Feb. 28, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation |
The Company has share-based incentive awards outstanding to its eligible employees and Directors under two employee equity incentive plans: (i) the 2007 Stock Option Plan (the 2007 Plan), and (ii) the 2009 Long-Term Incentive Plan (the 2009 Plan). No further awards may be granted under the 2007 Plan, although awards granted under the 2007 Plan remain outstanding in accordance with their terms. Awards granted under the 2009 Plan may be in the form of stock options, restricted stock units and other forms of share-based incentives, including performance restricted stock units, stock appreciation rights and deferred stock rights. | |
Stock Options | |
For the three months ended February 28, 2015 and 2014, the Company recognized share-based compensation expense related to stock option awards of less than $0.1 million for each period respectively. For the nine months ended February 28, 2015 and 2014, the Company recognized share-based compensation expense related to stock option awards of less than $0.1 million and $0.7 million respectively. As of February 28, 2015, there was less than $0.1 million of unrecognized compensation costs, net of estimated forfeitures, related to stock option awards, which are expected to be recognized over a remaining weighted average period of 1.0 year. | |
No stock options were granted during the nine months ended February 28, 2015 and 2014. | |
Restricted Stock Unit Awards | |
For the three months ended February 28, 2015 and 2014, the Company recognized share-based compensation expense related to restricted stock unit awards of $1.2 million and $1.0 million, respectively. For the nine months ended February 28, 2015 and 2014, the Company recognized share-based compensation expense related to restricted stock unit awards of $3.5 million and $2.9 million, respectively. As of February 28, 2015, there was $9.0 million of unrecognized compensation costs, net of estimated forfeitures, related to restricted stock unit awards, which are expected to be recognized over a remaining weighted average period of 2.4 years. | |
During the first nine months of fiscal 2015 and 2014, the Company granted approximately 21,000 and 19,000 shares, respectively, of fully-vested common stock to its five non-employee directors, in connection with its non-employee director compensation plan. These shares had grant date fair values of $0.4 million for each period respectively, which was recorded as share-based compensation expense during the nine months ended February 28, 2015 and 2014. | |
During the first nine months of fiscal 2015 and 2014, approximately 231,000 and 178,000 restricted stock units, respectively, vested. The fair value of these units was $5.2 million and $3.3 million, respectively. Upon vesting, restricted stock units are generally net share-settled to cover the required minimum withholding tax and the remaining amount is converted into an equivalent number of shares of common stock. | |
Performance Restricted Stock Units | |
In the second quarter of fiscal 2015, the Company granted performance restricted stock units to its executive and certain other senior officers. These units have requisite service (vesting) periods of three years and have no dividend rights. For the three and nine months ended February 28, 2015, the Company recognized share-based compensation expense related to performance restricted stock units of $0.1 million and $0.2 million, respectively. At February 28, 2015, there was $1.6 million of total unrecognized compensation costs related to approximately 115,000 non-vested performance restricted stock units. These costs are expected to be recognized over a weighted-average period of approximately 2.5 years. The actual payout of these units will vary based on the Company’s performance over a three-year period (based on pre-established targets) and a market condition modifier based on total shareholder return (TSR) compared to an industry peer group. Compensation cost is initially measured assuming that the target performance condition will be achieved. However, compensation cost related to the performance condition is adjusted for subsequent changes in the expected outcome of the performance condition. Compensation cost related to the TSR condition is fixed at the measurement date, and not subsequently adjusted. | |
In the second quarter of fiscal 2014, the Company granted performance restricted stock units to its executive officers and certain other senior officers. These units have requisite service (vesting) periods of three years and have no dividend rights. For the three months ended February 28, 2015 and 2014, the Company recognized share-based compensation expense/(benefit) related to performance restricted stock units of $(0.9) million and less than $0.1 million, respectively. For the nine months ended February 28, 2015 and 2014, the Company recognized share-based compensation expense related to performance restricted stock units of $0.7 million and $1.2 million, respectively. At February 28, 2015, there was $2.5 million of total unrecognized compensation costs related to approximately 423,000 non-vested performance restricted stock units. These costs are expected to be recognized over a weighted-average period of approximately 1.5 years. The actual payout of these units will vary based on the Company’s performance over one, two and three-year periods (based on pre-established targets) and a market condition modifier based on TSR compared to an industry peer group. Compensation cost is initially measured assuming that the target performance condition will be achieved. However, compensation cost related to the performance condition is adjusted for subsequent changes in the expected outcome of the performance condition. Compensation cost related to the TSR condition is fixed at the measurement date, and not subsequently adjusted. The one-year performance condition of the fiscal 2014 awards was not achieved. The one-year market condition of the fiscal 2014 awards was achieved and will payout at 170% of target once the requisite service period is complete. |
Earnings_per_Share
Earnings per Share | 9 Months Ended | |||||||||||||||
Feb. 28, 2015 | ||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||
Earnings per Share | Earnings per Share | |||||||||||||||
Basic earnings per share is computed by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, and (2) the dilutive effect of assumed conversion of equity awards using the treasury stock method. With respect to the number of weighted-average shares outstanding (denominator), diluted shares reflects: (i) only the exercise of options to acquire common stock to the extent that the options’ exercise prices are less than the average market price of common shares during the period and (ii) the pro forma vesting of restricted stock units. | ||||||||||||||||
The following table sets forth the computations of basic and diluted earnings per share: | ||||||||||||||||
Three months ended February 28, | Nine months ended February 28, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Basic earnings per share | ||||||||||||||||
Numerator: | ||||||||||||||||
Net income attributable to Mistras Group, Inc. | $ | 1,817 | $ | 1,201 | $ | 13,910 | $ | 16,099 | ||||||||
Denominator: | ||||||||||||||||
Weighted average common shares outstanding | 28,656 | 28,396 | 28,583 | 28,338 | ||||||||||||
Basic earnings per share | $ | 0.06 | $ | 0.04 | $ | 0.49 | $ | 0.57 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Net income attributable to Mistras Group, Inc. | $ | 1,817 | $ | 1,201 | $ | 13,910 | $ | 16,099 | ||||||||
Denominator: | ||||||||||||||||
Weighted average common shares outstanding | 28,656 | 28,396 | 28,583 | 28,338 | ||||||||||||
Dilutive effect of stock options outstanding | 694 | 849 | 742 | 750 | ||||||||||||
Dilutive effect of restricted stock units outstanding | 179 | 129 | 234 | 161 | ||||||||||||
29,529 | 29,374 | 29,559 | 29,249 | |||||||||||||
Diluted earnings per share | $ | 0.06 | $ | 0.04 | $ | 0.47 | $ | 0.55 | ||||||||
Acquisitions
Acquisitions | 9 Months Ended | |||
Feb. 28, 2015 | ||||
Business Combinations [Abstract] | ||||
Acquisitions | Acquisitions | |||
In the first nine months of fiscal 2015, the Company completed four acquisitions. The Company purchased a company, located in Louisiana, a provider of maintenance and inspection services primarily on offshore platforms. This acquisition expands the service offerings within the Services segment, allowing the Company to provide services to the upstream operations of its customers. The Company also purchased a group of asset protection businesses located in Quebec, Canada and an asset inspection business in Florida to complement service offerings within the Company’s Services segment and continue its market expansion strategy. The Company’s International Segment completed an acquisition of an asset inspection business located in the United Kingdom. | ||||
In these acquisitions, the Company acquired 100% of the common stock or certain assets of each acquiree in exchange for aggregate consideration of approximately $35.7 million in cash and $20.5 million in notes payable issued as part of the acquisition and other liabilities assumed. The Company accounted for these transactions in accordance with the acquisition method of accounting for business combinations. In addition, the acquisitions in Quebec and Florida provide for contingent consideration of up to $3.2 million to be earned based upon the acquired business achieving specific performance metrics over the next three years of operation. The Company is in the process of completing the purchase price allocations for these acquisitions. | ||||
The amortization period of intangible assets acquired in fiscal 2015 ranges from 3 to 10 years. The Company recorded $45.2 million of goodwill in connection with these acquisitions, reflecting the strategic fit and revenue and earnings growth potential of these business. | ||||
Revenues and operating income from these acquisitions for the period subsequent to the closing of these transactions were $38.4 million and $2.0 million, respectively, for the nine month period ended February 28, 2015. No unaudited pro forma financial information is required as these acquisitions are not significant to the Company. | ||||
In the first nine months of fiscal 2014, the Company completed four acquisitions. The Company acquired a professional engineering consulting and technical training services company located in the U.S. serving the hydrocarbon processing and other energy-related industries. The Company also completed the acquisition of an asset protection business located in Texas and two businesses located in Canada to continue its market expansion strategy. These companies were acquired to complement service offerings within the Company’s Services segment and expand its technical capabilities. In these acquisitions, the Company acquired 100% of the common stock or certain assets of each acquiree in exchange for aggregate consideration of $19.3 million in cash. In addition to the initial cash payment, the Company may pay up to $5.7 million in contingent consideration which may be earned based upon the acquired companies achieving specific performance metrics over specified periods ranging from 2 to 3 years from the acquisition date. | ||||
The assets and liabilities of the businesses acquired in fiscal 2015 were included in the Company’s consolidated balance sheet based upon their estimated fair values on the date of acquisition as determined in a preliminary purchase price allocation, using available information and making assumptions management believes are reasonable. The Company is still in the process of completing its valuation of the assets, both tangible and intangible, and liabilities acquired. The results of operations for these acquisitions are included in each respective operating segment’s results of operations from the date of acquisition. For acquisitions in fiscal 2015 for which the final purchase accounting has yet to be completed, the Company’s preliminary purchase price allocations are included in the table below, summarizing the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition: | ||||
Fiscal | ||||
2015 | ||||
Number of Entities | 3 | |||
Consideration transferred: | ||||
Cash paid | $ | 34,529 | ||
Notes payable issued to seller | 20,000 | |||
Contingent consideration | 2,255 | |||
Consideration transferred | 56,784 | |||
Current assets | 9,684 | |||
Property, plant and equipment | 6,964 | |||
Current deferred tax asset | 652 | |||
Intangibles | 12,373 | |||
Goodwill | 44,272 | |||
Current liabilities | (12,800 | ) | ||
Long-term deferred tax liability | (4,361 | ) | ||
Net assets acquired | $ | 56,784 | ||
During the nine month period ended February 28, 2015, the Company incurred acquisition-related costs of $0.2 million, in connection with due diligence, professional fees, and other expenses related to its acquisition activity. Additionally, the Company adjusted the fair value of certain previously recorded acquisition-related contingent consideration liabilities. For the three and nine month periods ended February 28, 2015, these adjustments resulted in a net decrease of acquisition-related contingent consideration liabilities and a corresponding increase in income from operations of $1.7 million and $3.3 million, respectively. The Company’s aggregate acquisition-related contingent consideration liabilities were $8.8 million and $14.1 million as of February 28, 2015 and May 31, 2014, respectively. | ||||
During the three and nine month period ended February 28, 2014, the Company incurred acquisition-related costs of $0.4 million and $0.9 million in connection with due diligence, professional fees, and other expenses for its acquisition activity. Additionally, the Company adjusted the fair value of certain acquisition-related contingent consideration liabilities. For the three month period ended February 28, 2014, these adjustments resulted in a net increase of acquisition-related contingent consideration liabilities and a corresponding decrease in income from operations of $0.6 million. For the nine month period ended February 28, 2014, these adjustments resulted in a net decrease of acquisition-related contingent consideration liabilities and a corresponding increase in income from operations of $2.4 million, respectively. | ||||
The fair value adjustments to acquisition-related contingent consideration liabilities and the acquisition-related transaction costs have been classified as acquisition-related expense, net in the condensed consolidated statements of income for the three and nine month periods ended February 28, 2015 and 2014. |
Accounts_Receivable_net
Accounts Receivable, net | 9 Months Ended | |||||||
Feb. 28, 2015 | ||||||||
Receivables [Abstract] | ||||||||
Accounts Receivable, net | Accounts Receivable, net | |||||||
Accounts receivable consisted of the following: | ||||||||
February 28, 2015 | May 31, 2014 | |||||||
Trade accounts receivable | $ | 128,148 | $ | 140,120 | ||||
Allowance for doubtful accounts | (2,600 | ) | (2,296 | ) | ||||
Account receivable, net | $ | 125,548 | $ | 137,824 | ||||
Property_Plant_and_Equipment_n
Property, Plant and Equipment, net | 9 Months Ended | |||||||||
Feb. 28, 2015 | ||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||
Property, Plant and Equipment, net | Property, Plant and Equipment, net | |||||||||
Property, plant and equipment consisted of the following: | ||||||||||
Useful Life | 28-Feb-15 | 31-May-14 | ||||||||
(Years) | ||||||||||
Land | $ | 1,859 | $ | 1,938 | ||||||
Buildings and improvements | 30-40 | 17,160 | 22,983 | |||||||
Office furniture and equipment | 8-May | 7,802 | 7,169 | |||||||
Machinery and equipment | 7-May | 158,530 | 144,798 | |||||||
185,351 | 176,888 | |||||||||
Accumulated depreciation and amortization | (105,226 | ) | (99,077 | ) | ||||||
Property, plant and equipment, net | $ | 80,125 | $ | 77,811 | ||||||
Depreciation expense for the three months ended February 28, 2015 and 2014 was $5.4 million and $4.9 million, respectively. Depreciation expense for the nine months ended February 28, 2015 and 2014 was $16.3 million and $14.1 million, respectively. |
Intangible_Assets
Intangible Assets | 9 Months Ended | |||||||||||||||||||||||||
Feb. 28, 2015 | ||||||||||||||||||||||||||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||||||||||||||||||||||||||
Intangible Assets | Intangible Assets | |||||||||||||||||||||||||
The gross amount, accumulated amortization and net carrying amount of intangible assets are as follows: | ||||||||||||||||||||||||||
28-Feb-15 | 31-May-14 | |||||||||||||||||||||||||
Useful Life | Gross | Accumulated | Net | Gross | Accumulated | Net | ||||||||||||||||||||
(Years) | Amount | Amortization | Carrying | Amount | Amortization | Carrying | ||||||||||||||||||||
Amount | Amount | |||||||||||||||||||||||||
Customer relationships | 12-May | $ | 83,923 | $ | (39,367 | ) | $ | 44,556 | $ | 82,395 | $ | (34,636 | ) | $ | 47,759 | |||||||||||
Software/Technology | 15-Mar | 15,523 | (9,937 | ) | 5,586 | 15,328 | (9,172 | ) | 6,156 | |||||||||||||||||
Covenants not to compete | 5-Feb | 10,453 | (8,355 | ) | 2,098 | 9,471 | (7,882 | ) | 1,589 | |||||||||||||||||
Other | 5-Feb | 7,960 | (4,053 | ) | 3,907 | 5,869 | (3,498 | ) | 2,371 | |||||||||||||||||
Total | $ | 117,859 | $ | (61,712 | ) | $ | 56,147 | $ | 113,063 | $ | (55,188 | ) | $ | 57,875 | ||||||||||||
Amortization expense for the three months ended February 28, 2015 and 2014 was $2.7 million and $2.4 million, respectively. Amortization expense for the nine months ended February 28, 2015 and 2014 was $8.5 million and $6.7 million, respectively. |
Accrued_Expenses_and_Other_Cur
Accrued Expenses and Other Current Liabilities | 9 Months Ended | |||||||
Feb. 28, 2015 | ||||||||
Payables and Accruals [Abstract] | ||||||||
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities | |||||||
Accrued expenses and other current liabilities consist of the following: | ||||||||
28-Feb-15 | 31-May-14 | |||||||
Accrued salaries, wages and related employee benefits | $ | 23,283 | $ | 26,236 | ||||
Contingent consideration, current portion | 3,825 | 4,778 | ||||||
Accrued workers’ compensation and health benefits | 3,908 | 3,661 | ||||||
Deferred revenue | 3,215 | 2,659 | ||||||
Other accrued expenses | 13,650 | 17,316 | ||||||
Total accrued expenses and other liabilities | $ | 47,881 | $ | 54,650 | ||||
LongTerm_Debt
Long-Term Debt | 9 Months Ended | |||||||
Feb. 28, 2015 | ||||||||
Debt Disclosure [Abstract] | ||||||||
Long-Term Debt | Long-Term Debt | |||||||
Long-term debt consists of the following: | ||||||||
28-Feb-15 | 31-May-14 | |||||||
Senior credit facility | $ | 96,693 | $ | 61,148 | ||||
Notes payable | 25,074 | 10,512 | ||||||
Other | 4,461 | 4,988 | ||||||
Total debt | 126,228 | 76,648 | ||||||
Less: Current portion | (16,906 | ) | (8,058 | ) | ||||
Long-term debt, net of current portion | $ | 109,322 | $ | 68,590 | ||||
Senior Credit Facility | ||||||||
On October 31, 2014, the Company entered into a Third Amendment and Modification Agreement (the “Amendment”), to its revolving line of credit, the Third Amended and Restated Credit Agreement (“Credit Agreement”), dated December 21, 2011, with Bank of America, N.A., as agent for the lenders and a lender, and JPMorgan Chase Bank, N.A., Keybank, National Association and TD Bank, N.A., as lenders. The Amendment increased the Company’s revolving line of credit to from $125.0 million to $175.0 million and provides that under certain circumstances the line of credit can be increased to $225.0 million. The Company may continue to borrow up to $30.0 million in non-U.S. Dollar currencies and use up to $10.0 million of the credit limit for the issuance of letters of credit. The Amendment also extended the original maturity date of the Credit Agreement from December 20, 2016 to October 30, 2019. As of February 28, 2015, the Company had borrowings of $96.7 million and a total of $4.7 million of letters of credit outstanding under the Credit Agreement. | ||||||||
Loans under the Credit Agreement bear interest at LIBOR plus an applicable LIBOR margin ranging from 1% to 1.75%, or a base rate less a margin of 1.25% to 0.375%, at the option of the Company, based upon the Company’s Funded Debt Leverage Ratio. Funded Debt Leverage Ratio is generally the ratio of (1) all outstanding indebtedness for borrowed money and other interest-bearing indebtedness as of the date of determination to (2) EBITDA (which is (a) net income, less (b) income (or plus loss) from discontinued operations and extraordinary items, plus (c) income tax expenses, plus (d) interest expense, plus (e) depreciation, depletion, and amortization (including non-cash loss on retirement of assets), plus (f) stock compensation expense, less (g) cash expense related to stock compensation, plus or minus certain other adjustments) for the period of four consecutive fiscal quarters immediately preceding the date of determination. The Company has the benefit of the lowest margin if its Funded Debt Leverage Ratio is equal to or less than 0.5 to 1, and the margin increases as the ratio increases, to the maximum margin if the ratio is greater than 2.0 to 1. The Company will also bear additional costs for market disruption, regulatory changes effecting the lenders’ funding costs, and default pricing of an additional 2% interest rate margin on any amounts not paid when due. Amounts borrowed under the Credit Agreement are secured by liens on substantially all of the assets of the Company. | ||||||||
The Credit Agreement contains financial covenants requiring that the Company maintain a Funded Debt Leverage Ratio of no greater than 3.0 to 1 and an Interest Coverage Ratio of at least 3.0 to 1. Interest Coverage Ratio means the ratio, as of any date of determination, of (a) EBITDA for the 12 month period immediately preceding the date of determination, to (b) all interest, premium payments, debt discount, fees, charges and related expenses of the Company and its subsidiaries in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, paid during the 12 month period immediately preceding the date of determination. The Credit Agreement also limits the Company’s ability to, among other things, create liens, make investments, incur more indebtedness, merge or consolidate, make dispositions of property, pay dividends and make distributions to stockholders, enter into a new line of business, enter into transactions with affiliates and enter into burdensome agreements. The Credit Agreement does not limit the Company’s ability to acquire other businesses or companies except that the acquired business or company must be in the Company's line of business, the Company must be in compliance with the financial covenants on a pro forma basis after taking into account the acquisition, and, if the acquired business is a separate subsidiary, in certain circumstances the lenders will receive the benefit of a guaranty of the subsidiary and liens on its assets and a pledge of its stock. | ||||||||
As of February 28, 2015, the Company was in compliance with the terms of the Credit Agreement, and will continuously monitor its compliance with the covenants contained in its credit agreement. | ||||||||
Notes Payable and Other | ||||||||
In connection with certain of its acquisitions through fiscal 2015, the Company issued subordinated notes payable to the sellers. The maturity of the notes that remain outstanding range from two to five years from the date of acquisition with stated interest rates ranging from 0% to 4%. The Company has discounted these obligations to reflect a 2% to 4% market interest. Unamortized discount on the notes was de minimis as of February 28, 2015 and May 31, 2014. Amortization is recorded as interest expense in the consolidated statements of income. | ||||||||
The Company has evaluated current market conditions and borrower credit quality and has determined that the carrying value of its long-term debt approximates fair value. The fair value of the Company’s notes payable and capital lease obligations approximates their carrying amounts based on anticipated interest rates which management believes would currently be available to the Company for similar issues of debt. |
Fair_Value_Measurements
Fair Value Measurements | 9 Months Ended | |||||||||||||||
Feb. 28, 2015 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||
Fair Value Measurements | Fair Value Measurements | |||||||||||||||
The Company performs fair value measurements in accordance with the guidance provided by ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a three level hierarchy that prioritizes the inputs used to measure fair value. The three levels of the hierarchy are defined as follows: | ||||||||||||||||
Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. | ||||||||||||||||
Level 2 — Observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs derived principally from or corroborated by observable market data. | ||||||||||||||||
Level 3 — Unobservable inputs reflecting the Company’s own assumptions about inputs that market participants would use in pricing the asset or liability based on the best information available. | ||||||||||||||||
In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company’s financial liabilities that are required to be remeasured at fair value on a recurring basis: | ||||||||||||||||
February 28, 2015 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities: | ||||||||||||||||
Contingent consideration | $ | — | $ | — | $ | 8,760 | $ | 8,760 | ||||||||
Total Liabilities | $ | — | $ | — | $ | 8,760 | $ | 8,760 | ||||||||
May 31, 2014 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities: | ||||||||||||||||
Contingent consideration | $ | — | $ | — | $ | 14,145 | $ | 14,145 | ||||||||
Total Liabilities | $ | — | $ | — | $ | 14,145 | $ | 14,145 | ||||||||
The fair value of contingent consideration liabilities that was classified as Level 3 in the table above was estimated using a discounted cash flow technique with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820. The significant inputs in the Level 3 measurement not supported by market activity include the probability assessments of expected future cash flows related to the acquisitions, appropriately discounted considering the uncertainties associated with the obligation, and as calculated in accordance with the terms of the applicable acquisition agreements. |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Feb. 28, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies |
Litigation | |
The Company is subject to periodic lawsuits, investigations and claims that arise in the ordinary course of business. Although the Company cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against it, the Company does not believe that any currently pending legal proceeding to which the Company is a party will have a material adverse effect on its business, results of operations, cash flows or financial condition. The costs of defense and amounts that may be recovered in such matters may be covered by insurance. | |
In January 2012, the Company received notice of a governmental investigation concerning an environmental incident which occurred in February 2011 outside on the premises of its Cudahy, California location. No human injury or property damage was reported or appears to have been caused as a result of this incident. While management cannot predict the ultimate outcome of this matter, based on its internal investigation to date, the Company does not believe the outcome will have a material effect on its financial condition or results of operations. | |
During fiscal 2012 and 2013, the Company performed radiography work on the construction of pipeline projects in Georgia. The Company has received notice that the owner of the pipeline projects contends that certain of the x-ray images the Company’s technicians prepared did not meet the code quality interpretation standards required by API (American Petroleum Institute) 1104 for one of the projects. The owner of the projects is claiming damages as a result of the alleged quality defects of the Company’s x-ray images. No lawsuit has been filed at this time. The owner has requested additional information on the other project, but has not yet indicated that any of the Company’s work was defective. The Company is currently unable to determine the likely outcome or reasonably estimate the amount or range of potential liability related to this matter, and accordingly, has not established any reserves for this matter. | |
The Company has received a notice from an insurance company of a chemical plant alleging that the Company is liable due to faulty inspections for all or part of $46 million of damages paid by the insurance company as a result of an explosion at the facility. The Company believes it was not involved in inspecting the portion of the plant where the explosion occurred and therefore has no liability for the claim. Accordingly, the Company has not established a reserve for this matter. | |
Acquisition-related contingencies | |
The Company is liable for contingent consideration in connection with certain of its acquisitions. As of February 28, 2015, total potential acquisition-related contingent consideration ranged from zero to approximately $23.3 million and would be payable upon the achievement of specific performance metrics by certain of the acquired companies over the next three years of operations. See Note 4 - Acquisitions to these consolidated financial statements for further discussion of the Company’s acquisitions. |
Segment_Disclosure
Segment Disclosure | 9 Months Ended | |||||||||||||||
Feb. 28, 2015 | ||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||
Segment Disclosure | Segment Disclosure | |||||||||||||||
The Company’s three operating segments are: | ||||||||||||||||
• | Services. This segment provides asset protection solutions primarily in North America with the largest concentration in the United States and the Canadian services business, 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 two segments to global markets, principally 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. | |||||||||||||||
Allocations for general corporate services, including accounting, audit, and contract management, that are provided to the segments are reported within Corporate and eliminations. Sales to the International segment from the Products and Systems segment and subsequent sales by the International segment of the same items are recorded and reflected in the operating performance of both segments. Additionally, engineering charges and royalty fees charged to the Services and International segments by the Products and Systems segment are reflected in the operating performance of each segment. All such intersegment transactions are eliminated in the Company’s consolidated financial reporting. | ||||||||||||||||
The accounting policies of the reportable segments are the same as those described in Note 1 — Description of Business and Basis of Presentation. Segment income from operations is determined based on internal performance measures used by the Chief Executive Officer, who is the chief operating decision maker, to assess the performance of each business in a given period and to make decisions as to resource allocations. In connection with that assessment, the Chief Executive Officer may exclude matters such as charges for share-based compensation and certain other acquisition-related charges and balances, technology and product development costs, certain gains and losses from dispositions, and litigation settlements or other charges. Certain general and administrative costs such as human resources, information technology and training are allocated to the segments. Segment income from operations also excludes interest and other financial charges and income taxes. Corporate and other assets are comprised principally of cash, deposits, property, plant and equipment, domestic deferred taxes, deferred charges and other assets. Corporate loss from operations consists of depreciation on the corporate office facilities and equipment, administrative charges related to corporate personnel and other charges that cannot be readily identified for allocation to a particular segment. | ||||||||||||||||
Selected consolidated financial information by segment for the periods shown was as follows: | ||||||||||||||||
Three months ended February 28, | Nine months ended February 28, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenues | ||||||||||||||||
Services | $ | 121,845 | $ | 109,122 | $ | 404,651 | $ | 313,794 | ||||||||
International | 33,554 | 38,064 | 114,610 | 119,032 | ||||||||||||
Products and Systems | 8,526 | 7,610 | 22,588 | 22,799 | ||||||||||||
Corporate and eliminations | (825 | ) | (3,069 | ) | (5,283 | ) | (11,305 | ) | ||||||||
$ | 163,100 | $ | 151,727 | $ | 536,566 | $ | 444,320 | |||||||||
Three months ended February 28, | Nine months ended February 28, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Gross profit | ||||||||||||||||
Services | $ | 27,429 | $ | 26,216 | $ | 101,452 | $ | 83,881 | ||||||||
International | 7,018 | 10,086 | 27,795 | 33,499 | ||||||||||||
Products and Systems | 4,211 | 3,674 | 10,203 | 9,776 | ||||||||||||
Corporate and eliminations | 76 | (676 | ) | 317 | (602 | ) | ||||||||||
$ | 38,734 | $ | 39,300 | $ | 139,767 | $ | 126,554 | |||||||||
Three months ended February 28, | Nine months ended February 28, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Income (loss) from operations | ||||||||||||||||
Services | $ | 7,257 | $ | 7,452 | $ | 36,208 | $ | 32,698 | ||||||||
International | (1,315 | ) | 84 | 1,163 | 9,192 | |||||||||||
Products and Systems | 1,346 | 87 | 1,330 | 1,147 | ||||||||||||
Corporate and eliminations | (3,418 | ) | (4,623 | ) | (12,975 | ) | (15,210 | ) | ||||||||
$ | 3,870 | $ | 3,000 | $ | 25,726 | $ | 27,827 | |||||||||
Income (loss) by operating segment includes intercompany transactions, which are eliminated in Corporate and eliminations. | ||||||||||||||||
Three months ended February 28, | Nine months ended February 28, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Depreciation and amortization | ||||||||||||||||
Services | $ | 5,658 | $ | 4,591 | $ | 16,622 | $ | 12,982 | ||||||||
International | 1,919 | 2,053 | 6,130 | 5,958 | ||||||||||||
Products and Systems | 608 | 597 | 1,809 | 1,763 | ||||||||||||
Corporate and eliminations | (71 | ) | 59 | 218 | 147 | |||||||||||
$ | 8,114 | $ | 7,300 | $ | 24,779 | $ | 20,850 | |||||||||
February 28, 2015 | May 31, 2014 | |||||||||||||||
Goodwill | ||||||||||||||||
Services | $ | 116,567 | $ | 73,767 | ||||||||||||
International | 36,767 | 43,552 | ||||||||||||||
Products and Systems | 13,197 | 13,197 | ||||||||||||||
$ | 166,531 | $ | 130,516 | |||||||||||||
February 28, 2015 | May 31, 2014 | |||||||||||||||
Total assets | ||||||||||||||||
Services | $ | 311,947 | $ | 249,378 | ||||||||||||
International | 125,427 | 155,571 | ||||||||||||||
Products and Systems | 35,410 | 38,041 | ||||||||||||||
Corporate and eliminations | 4,545 | 982 | ||||||||||||||
$ | 477,329 | $ | 443,972 | |||||||||||||
Revenues by geographic area for the three and nine months ended February 28, 2015 and 2014, respectively, were as follows: | ||||||||||||||||
Three months ended February 28, | Nine months ended February 28, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenues | ||||||||||||||||
United States | $ | 113,664 | $ | 100,784 | $ | 365,912 | $ | 283,438 | ||||||||
Other Americas | 14,353 | 12,417 | 53,917 | 39,589 | ||||||||||||
Europe | 31,644 | 33,636 | 106,370 | 106,441 | ||||||||||||
Asia-Pacific | 3,439 | 4,890 | 10,367 | 14,852 | ||||||||||||
$ | 163,100 | $ | 151,727 | $ | 536,566 | $ | 444,320 | |||||||||
Description_of_Business_and_Ba1
Description of Business and Basis of Presentation (Policies) | 9 Months Ended |
Feb. 28, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation |
The condensed consolidated financial statements contained in this report are unaudited. In the opinion of management, the condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods of the fiscal years ending May 31, 2015 and 2014. Reference to a fiscal year means the fiscal year ended May 31. Certain items included in these statements are based on management’s estimates. Actual results may differ from those estimates. The results of operations for any interim period are not necessarily indicative of the results expected for the year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the notes to consolidated financial statements contained in the Company’s Annual Report on Form 10-K (“Annual Report”) for fiscal 2014, as filed with the Securities and Exchange Commission on August 8, 2014. | |
Principles of Consolidation | Principles of Consolidation |
The accompanying unaudited condensed consolidated financial statements include the accounts of Mistras Group, Inc. and its wholly and majority-owned subsidiaries. For subsidiaries in which the Company’s ownership interest is less than 100%, the noncontrolling interests are reported in stockholders’ equity in the accompanying consolidated balance sheets. The noncontrolling interests in net income, net of tax, is classified separately in the accompanying consolidated statements of income. | |
All significant intercompany accounts and transactions have been eliminated in consolidation. Mistras Group, Inc.’s and its subsidiaries’ fiscal years end on May 31 except for the subsidiaries in the International segment, which end on April 30. Accordingly, the Company’s International segment subsidiaries are consolidated on a one month lag. Therefore, in the quarter and year of acquisition, results of acquired subsidiaries in the International segment are generally included in consolidated results for one less month than the actual number of months from the acquisition date to the end of the reporting period. Management does not believe that any events occurred during the one-month lag period that would have a material effect on the Company’s consolidated financial statements. | |
Reclassification | Reclassification |
Certain amounts in prior periods have been reclassified to conform to the current year presentation. Such reclassifications did not have a material effect on the Company’s financial condition or results of operations as previously reported. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2016. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company is currently evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. | |
In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period. This ASU requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. ASU 2014-12 is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2015. The Company is currently evaluating the effect that ASU 2014-12 will have on its consolidated financial statements and related disclosures. | |
In February 2015, the Financial Accounting Standards Board issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidations Analysis, which changes the guidance for evaluating whether to consolidate certain legal entities. Specifically, the amendments modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities ("VIEs") or voting interest entities. Further, the amendments eliminate the presumption that a general partner should consolidate a limited partnership, as well as affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. The updated guidance is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2015. Early adoption is permitted. Companies have an option of using either a full retrospective or modified retrospective adoption approach. The Company is evaluating the effect that ASU 2015-02 will have on its consolidated financial statements and related disclosures. |
Earnings_per_Share_Tables
Earnings per Share (Tables) | 9 Months Ended | |||||||||||||||
Feb. 28, 2015 | ||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||
Schedule of computations of basic and diluted earnings per share | The following table sets forth the computations of basic and diluted earnings per share: | |||||||||||||||
Three months ended February 28, | Nine months ended February 28, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Basic earnings per share | ||||||||||||||||
Numerator: | ||||||||||||||||
Net income attributable to Mistras Group, Inc. | $ | 1,817 | $ | 1,201 | $ | 13,910 | $ | 16,099 | ||||||||
Denominator: | ||||||||||||||||
Weighted average common shares outstanding | 28,656 | 28,396 | 28,583 | 28,338 | ||||||||||||
Basic earnings per share | $ | 0.06 | $ | 0.04 | $ | 0.49 | $ | 0.57 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Net income attributable to Mistras Group, Inc. | $ | 1,817 | $ | 1,201 | $ | 13,910 | $ | 16,099 | ||||||||
Denominator: | ||||||||||||||||
Weighted average common shares outstanding | 28,656 | 28,396 | 28,583 | 28,338 | ||||||||||||
Dilutive effect of stock options outstanding | 694 | 849 | 742 | 750 | ||||||||||||
Dilutive effect of restricted stock units outstanding | 179 | 129 | 234 | 161 | ||||||||||||
29,529 | 29,374 | 29,559 | 29,249 | |||||||||||||
Diluted earnings per share | $ | 0.06 | $ | 0.04 | $ | 0.47 | $ | 0.55 | ||||||||
Acquisitions_Tables
Acquisitions (Tables) | 9 Months Ended | |||
Feb. 28, 2015 | ||||
Business Combinations [Abstract] | ||||
Summary of estimated fair value of assets acquired and liabilities assumed at the date of acquisition | For acquisitions in fiscal 2015 for which the final purchase accounting has yet to be completed, the Company’s preliminary purchase price allocations are included in the table below, summarizing the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition: | |||
Fiscal | ||||
2015 | ||||
Number of Entities | 3 | |||
Consideration transferred: | ||||
Cash paid | $ | 34,529 | ||
Notes payable issued to seller | 20,000 | |||
Contingent consideration | 2,255 | |||
Consideration transferred | 56,784 | |||
Current assets | 9,684 | |||
Property, plant and equipment | 6,964 | |||
Current deferred tax asset | 652 | |||
Intangibles | 12,373 | |||
Goodwill | 44,272 | |||
Current liabilities | (12,800 | ) | ||
Long-term deferred tax liability | (4,361 | ) | ||
Net assets acquired | $ | 56,784 | ||
Accounts_Receivable_net_Tables
Accounts Receivable, net (Tables) | 9 Months Ended | |||||||
Feb. 28, 2015 | ||||||||
Receivables [Abstract] | ||||||||
Schedule of accounts receivable | Accounts receivable consisted of the following: | |||||||
February 28, 2015 | May 31, 2014 | |||||||
Trade accounts receivable | $ | 128,148 | $ | 140,120 | ||||
Allowance for doubtful accounts | (2,600 | ) | (2,296 | ) | ||||
Account receivable, net | $ | 125,548 | $ | 137,824 | ||||
Property_Plant_and_Equipment_n1
Property, Plant and Equipment, net (Tables) | 9 Months Ended | |||||||||
Feb. 28, 2015 | ||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||
Schedule of Property, plant and equipment | Property, plant and equipment consisted of the following: | |||||||||
Useful Life | 28-Feb-15 | 31-May-14 | ||||||||
(Years) | ||||||||||
Land | $ | 1,859 | $ | 1,938 | ||||||
Buildings and improvements | 30-40 | 17,160 | 22,983 | |||||||
Office furniture and equipment | 8-May | 7,802 | 7,169 | |||||||
Machinery and equipment | 7-May | 158,530 | 144,798 | |||||||
185,351 | 176,888 | |||||||||
Accumulated depreciation and amortization | (105,226 | ) | (99,077 | ) | ||||||
Property, plant and equipment, net | $ | 80,125 | $ | 77,811 | ||||||
Intangible_Assets_Tables
Intangible Assets (Tables) | 9 Months Ended | |||||||||||||||||||||||||
Feb. 28, 2015 | ||||||||||||||||||||||||||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||||||||||||||||||||||||||
Schedule of gross amount, accumulated amortization and net carrying amount of intangible assets | The gross amount, accumulated amortization and net carrying amount of intangible assets are as follows: | |||||||||||||||||||||||||
28-Feb-15 | 31-May-14 | |||||||||||||||||||||||||
Useful Life | Gross | Accumulated | Net | Gross | Accumulated | Net | ||||||||||||||||||||
(Years) | Amount | Amortization | Carrying | Amount | Amortization | Carrying | ||||||||||||||||||||
Amount | Amount | |||||||||||||||||||||||||
Customer relationships | 12-May | $ | 83,923 | $ | (39,367 | ) | $ | 44,556 | $ | 82,395 | $ | (34,636 | ) | $ | 47,759 | |||||||||||
Software/Technology | 15-Mar | 15,523 | (9,937 | ) | 5,586 | 15,328 | (9,172 | ) | 6,156 | |||||||||||||||||
Covenants not to compete | 5-Feb | 10,453 | (8,355 | ) | 2,098 | 9,471 | (7,882 | ) | 1,589 | |||||||||||||||||
Other | 5-Feb | 7,960 | (4,053 | ) | 3,907 | 5,869 | (3,498 | ) | 2,371 | |||||||||||||||||
Total | $ | 117,859 | $ | (61,712 | ) | $ | 56,147 | $ | 113,063 | $ | (55,188 | ) | $ | 57,875 | ||||||||||||
Accrued_Expenses_and_Other_Cur1
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended | |||||||
Feb. 28, 2015 | ||||||||
Payables and Accruals [Abstract] | ||||||||
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consist of the following: | |||||||
28-Feb-15 | 31-May-14 | |||||||
Accrued salaries, wages and related employee benefits | $ | 23,283 | $ | 26,236 | ||||
Contingent consideration, current portion | 3,825 | 4,778 | ||||||
Accrued workers’ compensation and health benefits | 3,908 | 3,661 | ||||||
Deferred revenue | 3,215 | 2,659 | ||||||
Other accrued expenses | 13,650 | 17,316 | ||||||
Total accrued expenses and other liabilities | $ | 47,881 | $ | 54,650 | ||||
LongTerm_Debt_Tables
Long-Term Debt (Tables) | 9 Months Ended | |||||||
Feb. 28, 2015 | ||||||||
Debt Disclosure [Abstract] | ||||||||
Schedule of long-term debt | Long-term debt consists of the following: | |||||||
28-Feb-15 | 31-May-14 | |||||||
Senior credit facility | $ | 96,693 | $ | 61,148 | ||||
Notes payable | 25,074 | 10,512 | ||||||
Other | 4,461 | 4,988 | ||||||
Total debt | 126,228 | 76,648 | ||||||
Less: Current portion | (16,906 | ) | (8,058 | ) | ||||
Long-term debt, net of current portion | $ | 109,322 | $ | 68,590 | ||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 9 Months Ended | |||||||||||||||
Feb. 28, 2015 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||
Schedule of fair value of the Company's financial liabilities that are required to be remeasured at fair value on a recurring basis | In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company’s financial liabilities that are required to be remeasured at fair value on a recurring basis: | |||||||||||||||
February 28, 2015 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities: | ||||||||||||||||
Contingent consideration | $ | — | $ | — | $ | 8,760 | $ | 8,760 | ||||||||
Total Liabilities | $ | — | $ | — | $ | 8,760 | $ | 8,760 | ||||||||
May 31, 2014 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities: | ||||||||||||||||
Contingent consideration | $ | — | $ | — | $ | 14,145 | $ | 14,145 | ||||||||
Total Liabilities | $ | — | $ | — | $ | 14,145 | $ | 14,145 | ||||||||
Segment_Disclosure_Tables
Segment Disclosure (Tables) | 9 Months Ended | |||||||||||||||
Feb. 28, 2015 | ||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||
Schedule of consolidated financial information by segment | Selected consolidated financial information by segment for the periods shown was as follows: | |||||||||||||||
Three months ended February 28, | Nine months ended February 28, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenues | ||||||||||||||||
Services | $ | 121,845 | $ | 109,122 | $ | 404,651 | $ | 313,794 | ||||||||
International | 33,554 | 38,064 | 114,610 | 119,032 | ||||||||||||
Products and Systems | 8,526 | 7,610 | 22,588 | 22,799 | ||||||||||||
Corporate and eliminations | (825 | ) | (3,069 | ) | (5,283 | ) | (11,305 | ) | ||||||||
$ | 163,100 | $ | 151,727 | $ | 536,566 | $ | 444,320 | |||||||||
Three months ended February 28, | Nine months ended February 28, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Gross profit | ||||||||||||||||
Services | $ | 27,429 | $ | 26,216 | $ | 101,452 | $ | 83,881 | ||||||||
International | 7,018 | 10,086 | 27,795 | 33,499 | ||||||||||||
Products and Systems | 4,211 | 3,674 | 10,203 | 9,776 | ||||||||||||
Corporate and eliminations | 76 | (676 | ) | 317 | (602 | ) | ||||||||||
$ | 38,734 | $ | 39,300 | $ | 139,767 | $ | 126,554 | |||||||||
Three months ended February 28, | Nine months ended February 28, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Income (loss) from operations | ||||||||||||||||
Services | $ | 7,257 | $ | 7,452 | $ | 36,208 | $ | 32,698 | ||||||||
International | (1,315 | ) | 84 | 1,163 | 9,192 | |||||||||||
Products and Systems | 1,346 | 87 | 1,330 | 1,147 | ||||||||||||
Corporate and eliminations | (3,418 | ) | (4,623 | ) | (12,975 | ) | (15,210 | ) | ||||||||
$ | 3,870 | $ | 3,000 | $ | 25,726 | $ | 27,827 | |||||||||
Income (loss) by operating segment includes intercompany transactions, which are eliminated in Corporate and eliminations. | ||||||||||||||||
Three months ended February 28, | Nine months ended February 28, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Depreciation and amortization | ||||||||||||||||
Services | $ | 5,658 | $ | 4,591 | $ | 16,622 | $ | 12,982 | ||||||||
International | 1,919 | 2,053 | 6,130 | 5,958 | ||||||||||||
Products and Systems | 608 | 597 | 1,809 | 1,763 | ||||||||||||
Corporate and eliminations | (71 | ) | 59 | 218 | 147 | |||||||||||
$ | 8,114 | $ | 7,300 | $ | 24,779 | $ | 20,850 | |||||||||
February 28, 2015 | May 31, 2014 | |||||||||||||||
Goodwill | ||||||||||||||||
Services | $ | 116,567 | $ | 73,767 | ||||||||||||
International | 36,767 | 43,552 | ||||||||||||||
Products and Systems | 13,197 | 13,197 | ||||||||||||||
$ | 166,531 | $ | 130,516 | |||||||||||||
February 28, 2015 | May 31, 2014 | |||||||||||||||
Total assets | ||||||||||||||||
Services | $ | 311,947 | $ | 249,378 | ||||||||||||
International | 125,427 | 155,571 | ||||||||||||||
Products and Systems | 35,410 | 38,041 | ||||||||||||||
Corporate and eliminations | 4,545 | 982 | ||||||||||||||
$ | 477,329 | $ | 443,972 | |||||||||||||
Schedule of revenues by geographic area | Revenues by geographic area for the three and nine months ended February 28, 2015 and 2014, respectively, were as follows: | |||||||||||||||
Three months ended February 28, | Nine months ended February 28, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenues | ||||||||||||||||
United States | $ | 113,664 | $ | 100,784 | $ | 365,912 | $ | 283,438 | ||||||||
Other Americas | 14,353 | 12,417 | 53,917 | 39,589 | ||||||||||||
Europe | 31,644 | 33,636 | 106,370 | 106,441 | ||||||||||||
Asia-Pacific | 3,439 | 4,890 | 10,367 | 14,852 | ||||||||||||
$ | 163,100 | $ | 151,727 | $ | 536,566 | $ | 444,320 | |||||||||
Description_of_Business_and_Ba2
Description of Business and Basis of Presentation (Details) | 9 Months Ended |
Feb. 28, 2015 | |
M | |
Principles of Consolidation | |
Difference of period between the consolidation of International segment subsidiaries | 1 month |
Number of months less than the actual number of months from the acquisition date for which results of international segment subsidiaries are included in consolidation | 1 |
ShareBased_Compensation_Detail
Share-Based Compensation (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 |
Share-based compensation | ||||
Number of employee stock ownership plans | 2 | |||
Stock Options | ||||
Share-based compensation | ||||
Recognized share-based compensation expense (less than) | $0.10 | $0.10 | $0.10 | $0.70 |
Unrecognized compensation costs, net of estimated forfeitures, related to stock option awards (less than) | $0.10 | $0.10 | ||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 1 year 0 months | |||
Stock options granted (in shares) | 0 | 0 | ||
2007 Plan | ||||
Share-based compensation | ||||
Number of awards that may be granted (in shares) | 0 | 0 |
ShareBased_Compensation_Detail1
Share-Based Compensation (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Share data in Thousands, unless otherwise specified | Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 |
Non-employee directors | ||||
Share-based compensation | ||||
Number of fully vested common stock granted | 21 | 19 | ||
Number of non-employee directors to whom fully vested common stock is granted | 5 | 5 | ||
Fair value of shares vested | $0.40 | $0.40 | ||
Restricted Stock Units | ||||
Share-based compensation | ||||
Recognized share-based compensation expense | 1.2 | 1 | 3.5 | 2.9 |
Unrecognized compensation cost, net of estimated forfeitures, related to restricted stock unit awards | 9 | 9 | ||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 2 years 4 months 9 days | |||
Fair value of shares vested | $5.20 | $3.30 | ||
Shares vested (in shares) | 231 | 178 |
ShareBased_Compensation_Detail2
Share-Based Compensation (Details 3) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||
In Millions, except Share data in Thousands, unless otherwise specified | Feb. 28, 2015 | Nov. 30, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | Nov. 30, 2013 | Feb. 28, 2014 |
Fiscal 2015 Grants | Performance Restricted Stock Units | ||||||
Share-based compensation | ||||||
Requisite service period | 3 years | |||||
Recognized share-based compensation expense (less than) | $0.10 | $0.20 | ||||
Unrecognized compensation cost, net of estimated forfeitures, related to restricted stock unit awards | 1.6 | 1.6 | ||||
Unvested restricted stock units outstanding (in shares) | 115 | 115 | ||||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 2 years 6 months 16 days | |||||
Performance period | 3 years | |||||
Fiscal 2014 Grants | ||||||
Share-based compensation | ||||||
Payout for the fiscal 2014 market condition awards, percentage of target | 170.00% | |||||
Fiscal 2014 Grants | Performance Restricted Stock Units | ||||||
Share-based compensation | ||||||
Requisite service period | 3 years | |||||
Recognized share-based compensation expense (less than) | -0.9 | 0.7 | 0.1 | 1.2 | ||
Unrecognized compensation cost, net of estimated forfeitures, related to restricted stock unit awards | $2.50 | $2.50 | ||||
Unvested restricted stock units outstanding (in shares) | 423 | 423 | ||||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 1 year 6 months 16 days | |||||
Fiscal 2014 Grants | Performance Restricted Stock Units with one year EPS performance condition | ||||||
Share-based compensation | ||||||
Performance period | 1 year | |||||
Fiscal 2014 Grants | Performance Restricted Stock Units with two year EPS performance condition | ||||||
Share-based compensation | ||||||
Performance period | 2 years | |||||
Fiscal 2014 Grants | Performance Restricted Stock Units with three year EPS performance condition | ||||||
Share-based compensation | ||||||
Performance period | 3 years |
Earnings_per_Share_Details
Earnings per Share (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 |
Numerator: | ||||
Net income attributable to Mistras Group, Inc. | $1,817 | $1,201 | $13,910 | $16,099 |
Denominator: | ||||
Weighted average common shares outstanding | 28,656 | 28,396 | 28,583 | 28,338 |
Basic earnings per share (in dollars per share) | $0.06 | $0.04 | $0.49 | $0.57 |
Numerator: | ||||
Net income attributable to Mistras Group, Inc. | $1,817 | $1,201 | $13,910 | $16,099 |
Denominator: | ||||
Weighted average common shares outstanding | 28,656 | 28,396 | 28,583 | 28,338 |
Dilutive effect of stock options outstanding (in shares) | 694 | 849 | 742 | 750 |
Dilutive effect of restricted stock units outstanding (in shares) | 179 | 129 | 234 | 161 |
Weighted average common shares outstanding, diluted | 29,529 | 29,374 | 29,559 | 29,249 |
Diluted earnings per share (in dollars per share) | $0.06 | $0.04 | $0.47 | $0.55 |
Acquisitions_Details
Acquisitions (Details) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Feb. 28, 2015 | 31-May-14 |
Entity | ||
Consideration transferred: | ||
Contingent consideration | $8,800 | $14,100 |
Goodwill | 166,531 | 130,516 |
Fiscal 2015 acquisitions | ||
Estimated fair value of the assets acquired and liabilities assumed | ||
Number of Entities | 4 | |
Consideration transferred: | ||
Cash paid | 35,700 | |
Notes payable issued to seller | 20,500 | |
Preliminary | Fiscal 2015 acquisitions | ||
Estimated fair value of the assets acquired and liabilities assumed | ||
Number of Entities | 3 | |
Consideration transferred: | ||
Cash paid | 34,529 | |
Notes payable issued to seller | 20,000 | |
Contingent consideration | 2,255 | |
Consideration transferred | 56,784 | |
Current assets | 9,684 | |
Property, plant and equipment | 6,964 | |
Current deferred tax asset | 652 | |
Intangibles | 12,373 | |
Goodwill | 44,272 | |
Current liabilities | -12,800 | |
Long-term deferred tax liability | -4,361 | |
Net assets acquired | $56,784 |
Acquisitions_Details_2
Acquisitions (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | |||
Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | 31-May-14 | |
Acquisitions | |||||
Fair value of contingent consideration liabilities (less than) | $8,800,000 | $8,800,000 | $14,100,000 | ||
Period over which potential acquisition-related contingent consideration would be payable | 3 years | ||||
Other acquisition information | |||||
Acquisition related costs | 400,000 | 200,000 | 900,000 | ||
Fair value adjustment to contingent consideration liabilities | -1,700,000 | 600,000 | -3,266,000 | -2,414,000 | |
Fiscal 2015 acquisitions | |||||
Acquisitions | |||||
Number of Entities | 4 | ||||
Percentage of common stock acquired | 100.00% | 100.00% | |||
Cash paid | 35,700,000 | ||||
Notes payable issued to seller | 20,500,000 | ||||
Goodwill from acquisitions after purchase accounting adjustments | 45,200,000 | 45,200,000 | |||
Pro forma information of the results of operations | |||||
Revenues | 38,400,000 | ||||
Operating income | 2,000,000 | ||||
Fiscal 2015 acquisitions | Minimum | |||||
Acquisitions | |||||
Amortization period of intangible assets acquired | 3 years | ||||
Fiscal 2015 acquisitions | Maximum | |||||
Acquisitions | |||||
Amortization period of intangible assets acquired | 10 years | ||||
Fiscal 2014 acquisitions | |||||
Acquisitions | |||||
Number of Entities | 4 | ||||
Percentage of common stock acquired | 100.00% | 100.00% | |||
Cash paid | 19,300,000 | ||||
Fair value of contingent consideration liabilities (less than) | 5,700,000 | 5,700,000 | |||
Fiscal 2014 acquisitions | Minimum | |||||
Acquisitions | |||||
Period over which potential acquisition-related contingent consideration would be payable | 2 years | ||||
Fiscal 2014 acquisitions | Maximum | |||||
Acquisitions | |||||
Period over which potential acquisition-related contingent consideration would be payable | 3 years | ||||
Quebec And Florida | Fiscal 2015 acquisitions | |||||
Acquisitions | |||||
Fair value of contingent consideration liabilities (less than) | $3,200,000 | $3,200,000 | |||
Period over which potential acquisition-related contingent consideration would be payable | 3 years | ||||
Canada | Fiscal 2014 acquisitions | |||||
Acquisitions | |||||
Number of Entities | 2 |
Accounts_Receivable_net_Detail
Accounts Receivable, net (Details) (USD $) | Feb. 28, 2015 | 31-May-14 |
In Thousands, unless otherwise specified | ||
Receivables [Abstract] | ||
Trade accounts receivable | $128,148 | $140,120 |
Allowance for doubtful accounts | -2,600 | -2,296 |
Account receivable, net | $125,548 | $137,824 |
Property_Plant_and_Equipment_n2
Property, Plant and Equipment, net (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | 31-May-14 | |
Property, Plant and Equipment, net | |||||
Property, plant and equipment, gross | $185,351,000 | $185,351,000 | $176,888,000 | ||
Accumulated depreciation and amortization | -105,226,000 | -105,226,000 | -99,077,000 | ||
Property, plant and equipment, net | 80,125,000 | 80,125,000 | 77,811,000 | ||
Depreciation expense | 5,400,000 | 4,900,000 | 16,300,000 | 14,100,000 | |
Land | |||||
Property, Plant and Equipment, net | |||||
Property, plant and equipment, gross | 1,859,000 | 1,859,000 | 1,938,000 | ||
Buildings and improvements | |||||
Property, Plant and Equipment, net | |||||
Property, plant and equipment, gross | 17,160,000 | 17,160,000 | 22,983,000 | ||
Buildings and improvements | Minimum | |||||
Property, Plant and Equipment, net | |||||
Useful Life (Years) | 30 years | ||||
Buildings and improvements | Maximum | |||||
Property, Plant and Equipment, net | |||||
Useful Life (Years) | 40 years | ||||
Office furniture and equipment | |||||
Property, Plant and Equipment, net | |||||
Property, plant and equipment, gross | 7,802,000 | 7,802,000 | 7,169,000 | ||
Office furniture and equipment | Minimum | |||||
Property, Plant and Equipment, net | |||||
Useful Life (Years) | 5 years | ||||
Office furniture and equipment | Maximum | |||||
Property, Plant and Equipment, net | |||||
Useful Life (Years) | 8 years | ||||
Machinery and equipment | |||||
Property, Plant and Equipment, net | |||||
Property, plant and equipment, gross | $158,530,000 | $158,530,000 | $144,798,000 | ||
Machinery and equipment | Minimum | |||||
Property, Plant and Equipment, net | |||||
Useful Life (Years) | 5 years | ||||
Machinery and equipment | Maximum | |||||
Property, Plant and Equipment, net | |||||
Useful Life (Years) | 7 years |
Intangible_Assets_Details
Intangible Assets (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | 31-May-14 | |
Intangible assets | |||||
Gross Amount | $117,859,000 | $117,859,000 | $113,063,000 | ||
Accumulated Amortization | -61,712,000 | -61,712,000 | -55,188,000 | ||
Net Carrying Amount | 56,147,000 | 56,147,000 | 57,875,000 | ||
Amortization expense | 2,700,000 | 2,400,000 | 8,500,000 | 6,700,000 | |
Customer relationships | |||||
Intangible assets | |||||
Gross Amount | 83,923,000 | 83,923,000 | 82,395,000 | ||
Accumulated Amortization | -39,367,000 | -39,367,000 | -34,636,000 | ||
Net Carrying Amount | 44,556,000 | 44,556,000 | 47,759,000 | ||
Customer relationships | Minimum | |||||
Intangible assets | |||||
Useful Life (Years) | 5 years | ||||
Customer relationships | Maximum | |||||
Intangible assets | |||||
Useful Life (Years) | 12 years | ||||
Software/Technology | |||||
Intangible assets | |||||
Gross Amount | 15,523,000 | 15,523,000 | 15,328,000 | ||
Accumulated Amortization | -9,937,000 | -9,937,000 | -9,172,000 | ||
Net Carrying Amount | 5,586,000 | 5,586,000 | 6,156,000 | ||
Software/Technology | Minimum | |||||
Intangible assets | |||||
Useful Life (Years) | 3 years | ||||
Software/Technology | Maximum | |||||
Intangible assets | |||||
Useful Life (Years) | 15 years | ||||
Covenants not to compete | |||||
Intangible assets | |||||
Gross Amount | 10,453,000 | 10,453,000 | 9,471,000 | ||
Accumulated Amortization | -8,355,000 | -8,355,000 | -7,882,000 | ||
Net Carrying Amount | 2,098,000 | 2,098,000 | 1,589,000 | ||
Covenants not to compete | Minimum | |||||
Intangible assets | |||||
Useful Life (Years) | 2 years | ||||
Covenants not to compete | Maximum | |||||
Intangible assets | |||||
Useful Life (Years) | 5 years | ||||
Other | |||||
Intangible assets | |||||
Gross Amount | 7,960,000 | 7,960,000 | 5,869,000 | ||
Accumulated Amortization | -4,053,000 | -4,053,000 | -3,498,000 | ||
Net Carrying Amount | $3,907,000 | $3,907,000 | $2,371,000 | ||
Other | Minimum | |||||
Intangible assets | |||||
Useful Life (Years) | 2 years | ||||
Other | Maximum | |||||
Intangible assets | |||||
Useful Life (Years) | 5 years |
Accrued_Expenses_and_Other_Cur2
Accrued Expenses and Other Current Liabilities (Details) (USD $) | Feb. 28, 2015 | 31-May-14 |
In Thousands, unless otherwise specified | ||
Payables and Accruals [Abstract] | ||
Accrued salaries, wages and related employee benefits | $23,283 | $26,236 |
Contingent consideration, current portion | 3,825 | 4,778 |
Accrued workers’ compensation and health benefits | 3,908 | 3,661 |
Deferred revenue | 3,215 | 2,659 |
Other accrued expenses | 13,650 | 17,316 |
Total accrued expenses and other liabilities | $47,881 | $54,650 |
LongTerm_Debt_Details
Long-Term Debt (Details) (USD $) | 0 Months Ended | 9 Months Ended | ||
Oct. 31, 2014 | Feb. 28, 2015 | 31-May-14 | Oct. 30, 2014 | |
Quarter | ||||
Long-Term Debt | ||||
Long-term debt | $126,228,000 | $76,648,000 | ||
Less: Current portion | -16,906,000 | -8,058,000 | ||
Long-term debt, net of current portion | 109,322,000 | 68,590,000 | ||
Senior credit facility | ||||
Long-Term Debt | ||||
Long-term debt | 96,693,000 | 61,148,000 | ||
Senior Credit Facility | ||||
Maximum borrowing capacity | 175,000,000 | 125,000,000 | ||
Line of credit facility, higher borrowing capacity option | 225,000,000 | |||
Maximum borrowing capacity in non-U.S. Dollar currencies | 30,000,000 | |||
Maximum amount available for the issuance of letters of credit | 10,000,000 | |||
Outstanding borrowings | 96,700,000 | |||
Outstanding letters of credit | 4,700,000 | |||
Number of consecutive fiscal quarters used for calculating Funded Debt Leverage Ratio | 4 | |||
Funded Debt Leverage Ratio at which the entity will have the benefit of lowest interest margin (less than or equal to) | 0.5 | |||
Funded Debt Leverage Ratio at which the entity will bear the maximum interest rate margin (greater than) | 2 | |||
Additional interest rate margin if Funded Debt Leverage Ratio exceeds threshold (as a percent) | 2.00% | |||
Funded Debt Leverage Ratio for additional interest payment (less than) | 3 | |||
Interest Coverage Ratio (greater than) | 3 | |||
Preceding period used for calculating Interest Coverage Ratio | 12 months | |||
Senior credit facility | LIBOR | ||||
Senior Credit Facility | ||||
Reference rate, description | LIBOR | |||
Senior credit facility | LIBOR | Minimum | ||||
Senior Credit Facility | ||||
Margin (as a percent) | 1.00% | |||
Senior credit facility | LIBOR | Maximum | ||||
Senior Credit Facility | ||||
Margin (as a percent) | 1.75% | |||
Senior credit facility | Base rate | ||||
Senior Credit Facility | ||||
Reference rate, description | base rate | |||
Senior credit facility | Base rate | Minimum | ||||
Senior Credit Facility | ||||
Margin (as a percent) | -0.38% | |||
Senior credit facility | Base rate | Maximum | ||||
Senior Credit Facility | ||||
Margin (as a percent) | -1.25% | |||
Notes payable | ||||
Long-Term Debt | ||||
Long-term debt | 25,074,000 | 10,512,000 | ||
Notes Payable and Other | ||||
Interest rate, minimum (as a percent) | 0.00% | |||
Interest rate, maximum (as a percent) | 4.00% | |||
Notes payable | Minimum | ||||
Notes Payable and Other | ||||
Maturity term from the date of acquisition | 2 years | |||
Market interest rate (as a percent) | 2.00% | |||
Notes payable | Maximum | ||||
Notes Payable and Other | ||||
Maturity term from the date of acquisition | 5 years | |||
Market interest rate (as a percent) | 4.00% | |||
Other | ||||
Long-Term Debt | ||||
Long-term debt | $4,461,000 | $4,988,000 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | Feb. 28, 2015 | 31-May-14 |
In Thousands, unless otherwise specified | ||
Liabilities: | ||
Contingent consideration | $8,800 | $14,100 |
Recurring basis | ||
Liabilities: | ||
Contingent consideration | 8,760 | 14,145 |
Total Liabilities | 8,760 | 14,145 |
Recurring basis | Level 3 | ||
Liabilities: | ||
Contingent consideration | 8,760 | 14,145 |
Total Liabilities | $8,760 | $14,145 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | 9 Months Ended |
Feb. 28, 2015 | |
Litigation | |
Period over which potential acquisition-related contingent consideration would be payable | 3 years |
Lawsuits for alleged quality defects | |
Litigation | |
Number of claims filed | 0 |
Lawsuit for liability due to faulty inspections | |
Litigation | |
Expected maximum possible liability | 46,000,000 |
Acquisition-related contingencies | |
Litigation | |
Potential acquisition-related contingent consideration, low end of range | 0 |
Potential acquisition-related contingent consideration, high end of range | 23,300,000 |
Segment_Disclosure_Details
Segment Disclosure (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | 31-May-14 |
Operating_Segment | |||||
Segment Reporting [Abstract] | |||||
Number of operating segments | 3 | ||||
Financial information by segment | |||||
Revenues | $163,100 | $151,727 | $536,566 | $444,320 | |
Gross profit | 38,734 | 39,300 | 139,767 | 126,554 | |
Income (loss) from operations | 3,870 | 3,000 | 25,726 | 27,827 | |
Depreciation and amortization | 8,114 | 7,300 | 24,779 | 20,850 | |
Goodwill | 166,531 | 166,531 | 130,516 | ||
Total assets | 477,329 | 477,329 | 443,972 | ||
Operating segments | Services | |||||
Financial information by segment | |||||
Revenues | 121,845 | 109,122 | 404,651 | 313,794 | |
Gross profit | 27,429 | 26,216 | 101,452 | 83,881 | |
Income (loss) from operations | 7,257 | 7,452 | 36,208 | 32,698 | |
Depreciation and amortization | 5,658 | 4,591 | 16,622 | 12,982 | |
Goodwill | 116,567 | 116,567 | 73,767 | ||
Total assets | 311,947 | 311,947 | 249,378 | ||
Operating segments | International | |||||
Financial information by segment | |||||
Revenues | 33,554 | 38,064 | 114,610 | 119,032 | |
Gross profit | 7,018 | 10,086 | 27,795 | 33,499 | |
Income (loss) from operations | -1,315 | 84 | 1,163 | 9,192 | |
Depreciation and amortization | 1,919 | 2,053 | 6,130 | 5,958 | |
Goodwill | 36,767 | 36,767 | 43,552 | ||
Total assets | 125,427 | 125,427 | 155,571 | ||
Operating segments | Products and Systems | |||||
Financial information by segment | |||||
Revenues | 8,526 | 7,610 | 22,588 | 22,799 | |
Gross profit | 4,211 | 3,674 | 10,203 | 9,776 | |
Income (loss) from operations | 1,346 | 87 | 1,330 | 1,147 | |
Depreciation and amortization | 608 | 597 | 1,809 | 1,763 | |
Goodwill | 13,197 | 13,197 | 13,197 | ||
Total assets | 35,410 | 35,410 | 38,041 | ||
Corporate and eliminations | |||||
Financial information by segment | |||||
Revenues | -825 | -3,069 | -5,283 | -11,305 | |
Gross profit | 76 | -676 | 317 | -602 | |
Income (loss) from operations | -3,418 | -4,623 | -12,975 | -15,210 | |
Depreciation and amortization | -71 | 59 | 218 | 147 | |
Total assets | $4,545 | $4,545 | $982 |
Segment_Disclosure_Details_2
Segment Disclosure (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 |
Revenue and long-lived assets by geographic area | ||||
Revenues | $163,100 | $151,727 | $536,566 | $444,320 |
United States | ||||
Revenue and long-lived assets by geographic area | ||||
Revenues | 113,664 | 100,784 | 365,912 | 283,438 |
Other Americas | ||||
Revenue and long-lived assets by geographic area | ||||
Revenues | 14,353 | 12,417 | 53,917 | 39,589 |
Europe | ||||
Revenue and long-lived assets by geographic area | ||||
Revenues | 31,644 | 33,636 | 106,370 | 106,441 |
Asia-Pacific | ||||
Revenue and long-lived assets by geographic area | ||||
Revenues | $3,439 | $4,890 | $10,367 | $14,852 |