Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Feb. 29, 2016 | Apr. 01, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Mistras Group, Inc. | |
Entity Central Index Key | 1,436,126 | |
Document Type | 10-Q | |
Document Period End Date | Feb. 29, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --05-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 28,924,214 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Feb. 29, 2016 | May. 31, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 18,095 | $ 10,555 |
Accounts receivable, net | 128,605 | 133,228 |
Inventories | 9,880 | 10,841 |
Deferred income taxes | 4,738 | 5,144 |
Prepaid expenses and other current assets | 13,263 | 11,698 |
Total current assets | 174,581 | 171,466 |
Property, plant and equipment, net | 75,665 | 79,256 |
Intangible assets, net | 44,331 | 51,276 |
Goodwill | 166,719 | 166,414 |
Deferred income taxes | 804 | 1,208 |
Other assets | 1,857 | 2,107 |
Total assets | 463,957 | 471,727 |
Current Liabilities | ||
Accounts payable | 10,240 | 10,529 |
Accrued expenses and other current liabilities | 53,184 | 55,914 |
Current portion of long-term debt | 12,488 | 17,902 |
Current portion of capital lease obligations | 6,864 | 8,646 |
Income taxes payable | 2,126 | 532 |
Total current liabilities | 84,902 | 93,523 |
Long-term debt, net of current portion | 74,878 | 95,557 |
Obligations under capital leases, net of current portion | 10,653 | 10,717 |
Deferred income taxes | 19,150 | 16,984 |
Other long-term liabilities | 7,482 | 9,934 |
Total liabilities | $ 197,065 | $ 226,715 |
Commitments and contingencies | ||
Equity | ||
Preferred stock, 10,000,000 shares authorized | $ 0 | $ 0 |
Common stock, $0.01 par value, 200,000,000 shares authorized | 290 | 287 |
Additional paid-in capital | 212,013 | 208,064 |
Retained earnings | 79,464 | 57,581 |
Accumulated other comprehensive loss | (24,991) | (21,113) |
Total Mistras Group, Inc. stockholders’ equity | 266,776 | 244,819 |
Noncontrolling interests | 116 | 193 |
Total equity | 266,892 | 245,012 |
Total liabilities and equity | $ 463,957 | $ 471,727 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Feb. 29, 2016 | May. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Income Statement [Abstract] | ||||
Revenue | $ 160,355 | $ 163,100 | $ 534,994 | $ 536,566 |
Cost of revenue | 112,357 | 119,356 | 368,477 | 382,018 |
Depreciation | 5,189 | 5,010 | 15,509 | 14,781 |
Gross profit | 42,809 | 38,734 | 151,008 | 139,767 |
Selling, general and administrative expenses | 33,747 | 32,758 | 103,591 | 105,158 |
Research and engineering | 677 | 644 | 1,899 | 1,922 |
Depreciation and amortization | 2,742 | 3,104 | 8,345 | 9,998 |
Acquisition-related (benefit), net | (115) | (1,642) | (1,086) | (3,037) |
Income from operations | 5,758 | 3,870 | 38,259 | 25,726 |
Interest expense | 1,123 | 1,161 | 4,380 | 3,418 |
Income before provision for income taxes | 4,635 | 2,709 | 33,879 | 22,308 |
Provision for income taxes | 1,034 | 941 | 12,001 | 8,457 |
Net income | 3,601 | 1,768 | 21,878 | 13,851 |
Less: net (income) loss attributable to noncontrolling interests, net of taxes | (8) | 49 | 12 | 59 |
Net income attributable to Mistras Group, Inc. | $ 3,593 | $ 1,817 | $ 21,890 | $ 13,910 |
Earnings per common share | ||||
Basic (in dollars per share) | $ 0.12 | $ 0.06 | $ 0.76 | $ 0.49 |
Diluted (in dollars per share) | $ 0.12 | $ 0.06 | $ 0.74 | $ 0.47 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 28,906 | 28,656 | 28,832 | 28,583 |
Diluted (in shares) | 29,899 | 29,529 | 29,760 | 29,559 |
Unaudited Condensed Consolidat5
Unaudited Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 3,601 | $ 1,768 | $ 21,878 | $ 13,851 |
Other comprehensive (loss): | ||||
Foreign currency translation adjustments | (2,842) | (10,694) | (3,878) | (18,610) |
Comprehensive income (loss) | 759 | (8,926) | 18,000 | (4,759) |
Less: comprehensive loss (income) attributable to noncontrolling interest | (8) | 49 | 12 | 59 |
Comprehensive income (loss) attributable to Mistras Group, Inc. | $ 751 | $ (8,877) | $ 18,012 | $ (4,700) |
Unaudited Condensed Consolidat6
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Cash flows from operating activities | ||
Net income | $ 21,878 | $ 13,851 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 23,854 | 24,779 |
Deferred income taxes | 2,880 | 2,177 |
Share-based compensation expense | 4,997 | 4,856 |
Fair value adjustment to contingent consideration liabilities | (1,292) | (3,266) |
Other | 85 | 520 |
Changes in operating assets and liabilities, net of effect of acquisitions of businesses: | ||
Accounts receivable | 1,378 | 12,207 |
Inventories | 1,235 | (735) |
Prepaid expenses and other current assets | (2,128) | (4,522) |
Other assets | 102 | (571) |
Accounts payable | (66) | (8,037) |
Accrued expenses and other liabilities | 1,197 | (4,594) |
Income taxes payable | 1,682 | (2,149) |
Net cash provided by operating activities | 55,802 | 34,516 |
Cash flows from investing activities | ||
Purchase of property, plant and equipment | (11,421) | (11,757) |
Purchase of intangible assets | (894) | (581) |
Acquisition of businesses, net of cash acquired | (1,709) | (34,671) |
Proceeds from sale of equipment | 1,056 | 872 |
Net cash used in investing activities | (12,968) | (46,137) |
Cash flows from financing activities | ||
Repayment of capital lease obligations | (5,577) | (6,005) |
Proceeds from borrowings of long-term debt | 2,293 | 1,145 |
Repayment of long-term debt | (16,991) | (11,741) |
Proceeds of revolver | 45,100 | 99,200 |
Repayments of revolver | (56,100) | (62,100) |
Payment of contingent consideration for business acquisitions | (2,090) | (3,034) |
Taxes paid related to net share settlement of share-based awards | (1,068) | (1,462) |
Excess tax benefit from share-based compensation | (266) | 382 |
Proceeds from the exercise of stock options | 361 | 682 |
Net cash (used in) provided by financing activities | (34,338) | 17,067 |
Effect of exchange rate changes on cash and cash equivalents | (956) | (2,081) |
Net change in cash and cash equivalents | 7,540 | 3,365 |
Cash and cash equivalents | ||
Beginning of period | 10,555 | 10,020 |
End of period | 18,095 | 13,385 |
Supplemental disclosure of cash paid | ||
Interest | 4,148 | 2,456 |
Income taxes | 7,875 | 12,388 |
Noncash investing and financing | ||
Equipment acquired through capital lease obligations | 3,957 | 5,502 |
Issuance of notes payable | $ 0 | $ 20,488 |
Description of Business and Bas
Description of Business and Basis of Presentation | 9 Months Ended |
Feb. 29, 2016 | |
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, 2016 and 2015 . 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 the audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K (“2015 Annual Report”) for fiscal 2015 , as filed with the Securities and Exchange Commission on August 12, 2015 . 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 condensed consolidated balance sheets. The noncontrolling interests in net income, net of tax, is classified separately in the accompanying condensed 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 condensed 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. Immaterial Correction Subsequent to the issuance of its interim condensed consolidated financial statements as of and for the three and nine months ended February 28, 2015 , the Company identified errors related to the classification of amounts reported in the Condensed Consolidated Statement of Cash Flows for that period. In accordance with the SEC Staff Accounting Bulletin (SAB) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, management evaluated the materiality of the errors from qualitative and quantitative perspectives, and concluded that the errors were immaterial. Accordingly, management has corrected the presentation of the affected line items of the accompanying Condensed Consolidated Statement of Cash Flows for the nine months ended February 28, 2015 , as summarized below. These changes did not impact the Company’s net income, balance sheet, or stockholders’ equity for any periods previously reported. Previously Reported Revised Cash flows from operating activities Accounts payable (7,741 ) (8,037 ) Accrued expenses and other liabilities (5,089 ) (4,594 ) Net cash provided by operating activities 34,317 34,516 Cash flows from investing activities Acquisition of businesses, net of cash acquired (34,967 ) (34,671 ) Net cash used in investing activities (46,433 ) (46,137 ) Cash flows from financing activities Proceeds from borrowings of long-term debt — 1,145 Repayments of long-term debt (10,596 ) (11,741 ) Net borrowings against revolver 35,544 37,100 Net cash provided by financing activities 15,511 17,067 Effect of exchange rate changes on cash and cash equivalents (30 ) (2,081 ) Significant Accounting Policies The Company’s significant accounting policies are disclosed in Note 2 — Summary of Significant Accounting Policies in the Company's 2015 Annual Report. On an ongoing basis, the Company evaluates 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 2015 Annual Report, there have been no material changes to the Company's significant accounting policies. Income Taxes The Company provides for income taxes in interim periods in an amount that aligns its year-to-date tax provision with the effective income tax rate expected for the full year, plus adjustments to certain discrete tax items. During the three months ended February 29, 2016 and February 28, 2015 , the Company's effective income tax rate differed from the statutory rate principally due to adjustments to certain discrete tax items related to the resolution and adjustment of certain income tax contingencies, which decreased the effective tax rate by 11% and 8% , respectively. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued 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 December 15, 2017, as a result of a one year deferral in the standard issued by the FASB in August 2015 with ASU 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date. 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 condensed consolidated financial statements and related disclosures. In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. This amendment will simplify the accounting for adjustments made to provisional amounts recognized in a business combination and eliminates the requirement to retrospectively account for those adjustments in previous reporting periods. This update will require on the face of the income statement or in the notes to the financial statements the amount recorded in current-period earnings that would have previously been recorded if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2015. This update should be applied prospectively and earlier adoption is permitted for financial statements that have not been issued. The Company is evaluating the effect that ASU 2015-16 will have on its condensed consolidated financial statements and related disclosures. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. This amendment will simplify the presentation of deferred tax assets and liabilities on the balance sheet and require all deferred tax assets and liabilities to be treated as non-current. ASU 2015-17 is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2016, with early adoption permitted. The Company is evaluating the effect that ASU 2015-17 will have on its condensed consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This amendment supersedes previous accounting guidance ( Topic 840) and requires all leases, with exception of leases with a term of 12 months or less, to be recorded on the balance sheet as lease assets and lease liabilities. ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2018, with early adoption permitted. The standard requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is evaluating the effect that ASU 2016-02 will have on its condensed consolidated financial statements and related disclosures. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Feb. 29, 2016 | |
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 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 and nine months ended February 29, 2016 and February 28, 2015 , the Company recognized share-based compensation expense related to stock option awards of less than $0.1 million for each period, respectively. As of February 29, 2016 , 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 less than 0.1 years . No stock options were granted during the nine months ended February 29, 2016 and February 28, 2015 . Restricted Stock Unit Awards For the three months ended February 29, 2016 and February 28, 2015 , the Company recognized share-based compensation expense related to restricted stock unit awards of $1.1 million and $ 1.2 million , respectively. For the nine months ended February 29, 2016 and February 28, 2015 , the Company recognized share-based compensation expense related to restricted stock unit awards of $ 3.3 million and $ 3.5 million , respectively. As of February 29, 2016 , there was $8.3 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 2.3 years . During the first nine months of fiscal 2016 and 2015 , the Company granted approximately 28,000 and 21,000 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 $0.5 million and $0.4 million , respectively, which was recorded as share-based compensation expense during the nine months ended February 29, 2016 and February 28, 2015 , respectively. During the first nine months of fiscal 2016 and 2015 , approximately 220,000 and 231,000 restricted stock units, respectively, vested. The fair value of these units was $3.5 million and $5.2 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 third quarter of fiscal 2014, the Company granted one -year, two -year and three -year performance restricted stock units to its executive officers and certain other senior officers. In the second quarter of fiscal 2015, the Company granted performance restricted stock units to its executive and certain other senior officers. In the first quarter of fiscal 2016, the Company modified its equity compensation program and granted 154,000 performance restricted stock units to its executive and certain other senior officers. As a condition for receiving any awards under the revised fiscal 2016 plan, the executive and senior officers surrendered and released all rights to receive any shares under the three -year 2014 awards and three -year 2015 awards with a performance or market condition. The Company has accounted for the fiscal 2016 awards as modifications in accordance with ASC 718, Compensation - Stock Compensation. These units have requisite service periods of five years and have no dividend rights. The actual payout of these units will vary based on the Company’s performance over a one -year period based on three metrics related to the Company’s fiscal 2016 performance: (1) Operating Income, (2) Adjusted EBITDAS, which is consistent with Adjusted EBITDA as disclosed in the financial statements, which is net income before interest, taxes, depreciation, amortization, non-cash stock-based compensation expense, acquisition related items, and other non-routine items as determined by the Committee and (3) Revenue. There is also a discretionary portion based on individual performance. During the three months ended November 30, 2015, the Company evaluated the expected performance metrics and increased the estimated performance shares expected to be granted by 80,000 units to a total of 234,000 units. No adjustment was required during the three months ended February 29, 2016. Compensation costs are initially measured assuming that the target performance conditions will be achieved. However, compensation costs related to the performance conditions are adjusted for subsequent changes in the expected outcomes of the performance conditions. The discretionary portion of these awards are liability-classified and adjusted to fair value each reporting period. Compensation costs for the discretionary portion of the awards are recognized over the same five year requisite service period as the awards based on the Company’s fiscal 2016 performance. For the three months ended February 29, 2016 and February 28, 2015 , the Company recognized share-based compensation expense/(benefit) related to performance restricted stock units, inclusive of all awards noted above, of approximately $0.4 million and $ (0.8) million , respectively. For the nine months ended February 29, 2016 and February 28, 2015 , the Company recognized share-based compensation expense related to these units of approximately $1.2 million and $0.9 million , respectively. At February 29, 2016 , there was $3.4 million of total unrecognized compensation costs related to the 234,000 non-vested performance restricted stock units, which are expected to be recognized over a remaining weighted average period of 3.8 years . |
Earnings per Share
Earnings per Share | 9 Months Ended |
Feb. 29, 2016 | |
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 Nine months ended February 29, 2016 February 28, 2015 February 29, 2016 February 28, 2015 Basic earnings per share Numerator: Net income attributable to Mistras Group, Inc. $ 3,593 $ 1,817 $ 21,890 $ 13,910 Denominator: Weighted average common shares outstanding 28,906 28,656 28,832 28,583 Basic earnings per share $ 0.12 $ 0.06 $ 0.76 $ 0.49 Diluted earnings per share: Numerator: Net income attributable to Mistras Group, Inc. $ 3,593 $ 1,817 $ 21,890 $ 13,910 Denominator: Weighted average common shares outstanding 28,906 28,656 28,832 28,583 Dilutive effect of stock options outstanding 739 694 657 742 Dilutive effect of restricted stock units outstanding 254 179 271 234 29,899 29,529 29,760 29,559 Diluted earnings per share $ 0.12 $ 0.06 $ 0.74 $ 0.47 |
Acquisitions
Acquisitions | 9 Months Ended |
Feb. 29, 2016 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Acquisitions In the first nine months of fiscal 2016, the Company completed one acquisition. The Company purchased a company that provides unmanned aerial systems and NDT services, located in the U.S. In this acquisition, the Company acquired 100% of the common stock of the acquiree in exchange for consideration of $1.8 million in cash and contingent consideration estimated to be $0.9 million to be earned based upon the acquired business achieving specific performance metrics over the initial four years of operations from the acquisition date. The Company accounted for this transaction in accordance with the acquisition method of accounting for business combinations. The assets and liabilities of the business acquired in fiscal 2016 were included in the Company's condensed 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 this acquisition is included in the Services segment's results from the date of acquisition. 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 2016 Number of Entities 1 Consideration transferred: Cash paid $ 1,750 Contingent consideration 945 Consideration transferred 2,695 Current assets 145 Property, plant and equipment 485 Goodwill 2,658 Current liabilities (521 ) Long-term deferred tax liability (72 ) Net assets acquired $ 2,695 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 expanded 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 acquisitions. 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 provided for contingent consideration of up to $3.2 million to be earned based upon the acquired business achieving specific performance metrics over the initial two to three years of operation from the acquisition date. 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 businesses. Acquisition-Related Expense During the three and nine month periods ended February 29, 2016 , the Company incurred acquisition-related costs of $0.1 million and $0.2 million , respectively, in connection with due diligence, professional fees, and other expenses for its acquisition activities. Additionally, the Company adjusted the fair value of certain previously recorded acquisition-related contingent consideration liabilities. These adjustments resulted in a net decrease of acquisition-related contingent consideration liabilities and a corresponding increase in income from operations of $0.2 million and $1.3 million , for the three and nine month periods ended February 29, 2016 , respectively. The Company’s aggregate acquisition-related contingent consideration liabilities were $3.8 million and $6.4 million as of February 29, 2016 and May 31, 2015 , respectively. During the three and nine month periods ended February 28, 2015 , the Company incurred acquisition-related costs of $0.2 million in connection with due diligence, professional fees, and other expenses for its acquisition activities. 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 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 29, 2016 and February 28, 2015 . |
Accounts Receivable, net
Accounts Receivable, net | 9 Months Ended |
Feb. 29, 2016 | |
Receivables [Abstract] | |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable consisted of the following: February 29, 2016 May 31, 2015 Trade accounts receivable $ 132,340 $ 136,208 Allowance for doubtful accounts (3,735 ) (2,980 ) Accounts receivable, net $ 128,605 $ 133,228 |
Property, Plant and Equipment,
Property, Plant and Equipment, net | 9 Months Ended |
Feb. 29, 2016 | |
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 (Years) February 29, 2016 May 31, 2015 Land $ 1,719 $ 1,856 Buildings and improvements 30-40 18,534 17,712 Office furniture and equipment 5-8 8,653 8,084 Machinery and equipment 5-7 166,379 162,612 195,285 190,264 Accumulated depreciation and amortization (119,620 ) (111,008 ) Property, plant and equipment, net $ 75,665 $ 79,256 Depreciation expense for the three months ended February 29, 2016 and February 28, 2015 was $5.5 million and $5.4 million , respectively. Depreciation expense for the nine months ended February 29, 2016 and February 28, 2015 was $16.7 million and $16.3 million , respectively. |
Goodwill
Goodwill | 9 Months Ended |
Feb. 29, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The changes in the carrying amount of goodwill by segment is shown below: Services International Products Total Balance at May 31, 2014 $ 73,767 $ 43,552 $ 13,197 $ 130,516 Goodwill acquired during the year 41,986 1,480 — 43,466 Adjustments to preliminary purchase price allocations 3,529 (367 ) — 3,162 Foreign currency translation (2,003 ) (8,727 ) — (10,730 ) Balance at May 31, 2015 $ 117,279 $ 35,938 $ 13,197 $ 166,414 Goodwill acquired (disposed) during the year 2,658 (374 ) — 2,284 Adjustments to preliminary purchase price allocations 271 — — 271 Foreign currency translation (1,034 ) (1,216 ) — (2,250 ) Balance at February 29, 2016 $ 119,174 $ 34,348 $ 13,197 $ 166,719 The Company reviews goodwill for impairment on a reporting unit basis on March 1 of each year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. As of February 29, 2016 , the Company did not identify any changes in circumstances that would indicate the carrying value of goodwill may not be recoverable. The Company's cumulative goodwill impairment as of February 29, 2016 , May 31, 2015 and May 31, 2014 was $9.9 million , which is within its International segment. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Feb. 29, 2016 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Intangible Assets | Intangible Assets The gross amount, accumulated amortization and net carrying amount of intangible assets were as follows: February 29, 2016 May 31, 2015 Useful Life (Years) Gross Amount Accumulated Amortization Net Carrying Amount Gross Amount Accumulated Amortization Net Carrying Amount Customer relationships 5-12 $ 79,577 $ (45,469 ) $ 34,108 $ 81,101 $ (41,009 ) $ 40,092 Software/Technology 3-15 17,055 (11,377 ) 5,678 15,738 (10,290 ) 5,448 Covenants not to compete 2-5 11,618 (9,102 ) 2,516 11,678 (8,605 ) 3,073 Other 2-5 6,820 (4,791 ) 2,029 6,910 (4,247 ) 2,663 Total $ 115,070 $ (70,739 ) $ 44,331 $ 115,427 $ (64,151 ) $ 51,276 Amortization expense for the three months ended February 29, 2016 and February 28, 2015 was $2.4 million and $2.7 million , respectively. Amortization expense for the nine months ended February 29, 2016 and February 28, 2015 was $7.2 million and $8.5 million , respectively. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Feb. 29, 2016 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following: February 29, 2016 May 31, 2015 Accrued salaries, wages and related employee benefits $ 27,274 $ 26,053 Contingent consideration, current portion 1,508 3,543 Accrued workers’ compensation and health benefits 5,933 3,630 Deferred revenue 4,302 3,841 Other accrued expenses 14,167 18,847 Total accrued expenses and other liabilities $ 53,184 $ 55,914 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Feb. 29, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following: February 29, 2016 May 31, 2015 Senior credit facility $ 71,528 $ 83,062 Notes payable 10,368 24,933 Other 5,470 5,464 Total debt 87,366 113,459 Less: Current portion (12,488 ) (17,902 ) Long-term debt, net of current portion $ 74,878 $ 95,557 Senior Credit Facility On October 31, 2014, the Company entered into a Third Amendment and Modification Agreement, to its revolving line of credit, the Third Amended and Restated Credit Agreement (“Credit Agreement”) 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 Credit Agreement provides the Company with a $175.0 million revolving line of credit, which, under certain circumstances, the line of credit can be increased to $225.0 million . The Company may 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 Credit Agreement has a maturity date of October 30, 2019. As of February 29, 2016 , the Company had borrowings of $71.5 million and a total of $4.5 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 3.25 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 29, 2016 , 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 29, 2016 and May 31, 2015 . Amortization is recorded as interest expense in the condensed 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 issuances of debt. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Feb. 29, 2016 | |
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 29, 2016 Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ 3,808 $ 3,808 Total Liabilities $ — $ — $ 3,808 $ 3,808 May 31, 2015 Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ 6,411 $ 6,411 Total Liabilities $ — $ — $ 6,411 $ 6,411 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. 29, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation and Government Investigations 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, except for the proceedings described below for which the Company is currently unable to determine the likely outcome or reasonably estimate the amount or range of potential liability estimate. The costs of defense and amounts that may be recovered against the Company in such matters may be covered by insurance, except that the primary claims set forth in the purported class action case in California is excluded from insurance coverage. Litigation and Commercial Claims In April 2015, two separate lawsuits were filed in California as purported class action lawsuits on behalf of current and former Mistras employees. The cases are David Kruger v Mistras Group, Inc. , filed in the U.S. District Court for the Eastern District of California and Edgar Viceral v Mistras Group, et al , pending in the U.S. District Court for the Northern District of California. Both cases were originally filed in California state court and were removed to the respective U.S. District Courts for the districts in which the state court cases were filed. These two cases have been consolidated, with Kruger dismissing his case and joining the Viceral case. As part of this consolidation, the claims in the Kruger case that were not part of the Viceral case were added to the Viceral case by the filing of an amended complaint. The consolidated case alleges violations of California statutes primarily, the California Labor Code, and seeks to proceed as a collective action under the U.S. Fair Labor Standards Act. The case is predicated on claims for allegedly missed rest and meal periods, inaccurate wage statements, and failure to pay all wages due, as well as related unfair business practices, and is requesting payment of all damages, including unpaid wages, and various fines and penalties available under California law. The parties met with a mediator on April 5, 2016 but no resolution of the case was reached, though the Company anticipates discussions regarding resolution may continue. The Company is currently unable to determine the likely outcome or reasonably estimate the amount or range of potential liability, if any, related to these matters, and accordingly, has not established any reserves for these matters. During fiscal 2012 and 2013, the Company performed radiography work on the construction of pipeline projects in the U.S. 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 regarding the projects did not meet the code quality interpretation standards required by API (American Petroleum Institute) 1103. The projects' owner 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 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. Government Investigations In May 2015, the Company received a notice from the U.S. Environmental Protection Agency (“EPA”) that it performed a preliminary assessment at a leased facility the Company operates in Cudahy, California. Based upon the preliminary assessment, the EPA is conducting an investigation of the site, which includes taking groundwater and soil samples. The purpose of the investigation is to determine whether any hazardous materials were released from the facility. The Company has been informed that certain hazardous materials and pollutants have been found in the ground water in the general vicinity of the site and the EPA is attempting to ascertain the origination or source of these materials and pollutants. Given the historic industrial use of the site, the EPA determined that the site of the Cudahy facility should be examined, along with numerous other sites in the vicinity. At this time, the Company is unable to determine whether it has any liability in connection with this matter and if so, the amount or range of any such liability, and accordingly, has not established any reserves for this matter. 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 the Cudahy facility. 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. To the Company’s knowledge, this matter has been dormant since fiscal 2012. Acquisition-related contingencies The Company is liable for contingent consideration in connection with certain of its acquisitions. As of February 29, 2016 , total potential acquisition-related contingent consideration ranged from zero to approximately $17.8 million and would be payable upon the achievement of specific performance metrics by certain of the acquired companies over the next 3.3 years of operations. See Note 4 - Acquisitions to these condensed consolidated financial statements for further discussion of the Company’s acquisitions. |
Segment Disclosure
Segment Disclosure | 9 Months Ended |
Feb. 29, 2016 | |
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. Selected consolidated financial information by segment for the periods shown was as follows: Three months ended Nine months ended February 29, 2016 February 28, 2015 February 29, 2016 February 28, 2015 Revenues Services $ 123,616 $ 121,845 $ 411,484 $ 404,651 International 31,801 33,554 107,085 114,610 Products and Systems 6,866 8,526 23,343 22,588 Corporate and eliminations (1,928 ) (825 ) (6,918 ) (5,283 ) $ 160,355 $ 163,100 $ 534,994 $ 536,566 Three months ended Nine months ended February 29, 2016 February 28, 2015 February 29, 2016 February 28, 2015 Gross profit Services $ 30,256 $ 27,429 $ 107,943 $ 101,452 International 9,227 7,018 32,113 27,795 Products and Systems 3,202 4,211 10,957 10,203 Corporate and eliminations 124 76 (5 ) 317 $ 42,809 $ 38,734 $ 151,008 $ 139,767 Three months ended Nine months ended February 29, 2016 February 28, 2015 February 29, 2016 February 28, 2015 Income (loss) from operations Services $ 10,071 $ 7,257 $ 44,285 $ 36,208 International 1,136 (1,315 ) 6,925 1,163 Products and Systems 438 1,346 2,677 1,330 Corporate and eliminations (5,887 ) (3,418 ) (15,628 ) (12,975 ) $ 5,758 $ 3,870 $ 38,259 $ 25,726 Income (loss) by operating segment includes intercompany transactions, which are eliminated in Corporate and eliminations. Three months ended Nine months ended February 29, 2016 February 28, 2015 February 29, 2016 February 28, 2015 Depreciation and amortization Services $ 5,556 $ 5,658 $ 16,640 $ 16,622 International 1,876 1,919 5,762 6,130 Products and Systems 587 608 1,727 1,809 Corporate and eliminations (88 ) (71 ) (275 ) 218 $ 7,931 $ 8,114 $ 23,854 $ 24,779 February 29, 2016 May 31, 2015 Goodwill Services $ 119,174 $ 117,279 International 34,348 35,938 Products and Systems 13,197 13,197 $ 166,719 $ 166,414 February 29, 2016 May 31, 2015 Total assets Services $ 300,553 $ 301,031 International 122,669 126,643 Products and Systems 32,753 35,464 Corporate and eliminations 7,982 8,589 $ 463,957 $ 471,727 Revenues by geographic area for the three and nine months ended February 29, 2016 and 2015 , respectively, were as follows: Three months ended Nine months ended February 29, 2016 February 28, 2015 February 29, 2016 February 28, 2015 Revenues United States $ 109,518 $ 113,664 $ 371,929 $ 365,912 Other Americas 17,162 14,353 52,248 53,917 Europe 29,706 31,644 100,411 106,370 Asia-Pacific 3,969 3,439 10,406 10,367 $ 160,355 $ 163,100 $ 534,994 $ 536,566 |
Description of Business and B20
Description of Business and Basis of Presentation (Policies) | 9 Months Ended |
Feb. 29, 2016 | |
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, 2016 and 2015 . 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 the audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K (“2015 Annual Report”) for fiscal 2015 , as filed with the Securities and Exchange Commission on August 12, 2015 . |
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 condensed consolidated balance sheets. The noncontrolling interests in net income, net of tax, is classified separately in the accompanying condensed 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 condensed 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 ("FASB") issued 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 December 15, 2017, as a result of a one year deferral in the standard issued by the FASB in August 2015 with ASU 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date. 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 condensed consolidated financial statements and related disclosures. In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. This amendment will simplify the accounting for adjustments made to provisional amounts recognized in a business combination and eliminates the requirement to retrospectively account for those adjustments in previous reporting periods. This update will require on the face of the income statement or in the notes to the financial statements the amount recorded in current-period earnings that would have previously been recorded if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2015. This update should be applied prospectively and earlier adoption is permitted for financial statements that have not been issued. The Company is evaluating the effect that ASU 2015-16 will have on its condensed consolidated financial statements and related disclosures. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. This amendment will simplify the presentation of deferred tax assets and liabilities on the balance sheet and require all deferred tax assets and liabilities to be treated as non-current. ASU 2015-17 is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2016, with early adoption permitted. The Company is evaluating the effect that ASU 2015-17 will have on its condensed consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This amendment supersedes previous accounting guidance ( Topic 840) and requires all leases, with exception of leases with a term of 12 months or less, to be recorded on the balance sheet as lease assets and lease liabilities. ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2018, with early adoption permitted. The standard requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is evaluating the effect that ASU 2016-02 will have on its condensed consolidated financial statements and related disclosures. |
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. |
Description of Business and B21
Description of Business and Basis of Presentation (Tables) | 9 Months Ended |
Feb. 29, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Quantifying Prior Year Misstatement Corrected in Current Year Financial Statements | In accordance with the SEC Staff Accounting Bulletin (SAB) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, management evaluated the materiality of the errors from qualitative and quantitative perspectives, and concluded that the errors were immaterial. Accordingly, management has corrected the presentation of the affected line items of the accompanying Condensed Consolidated Statement of Cash Flows for the nine months ended February 28, 2015 , as summarized below. These changes did not impact the Company’s net income, balance sheet, or stockholders’ equity for any periods previously reported. Previously Reported Revised Cash flows from operating activities Accounts payable (7,741 ) (8,037 ) Accrued expenses and other liabilities (5,089 ) (4,594 ) Net cash provided by operating activities 34,317 34,516 Cash flows from investing activities Acquisition of businesses, net of cash acquired (34,967 ) (34,671 ) Net cash used in investing activities (46,433 ) (46,137 ) Cash flows from financing activities Proceeds from borrowings of long-term debt — 1,145 Repayments of long-term debt (10,596 ) (11,741 ) Net borrowings against revolver 35,544 37,100 Net cash provided by financing activities 15,511 17,067 Effect of exchange rate changes on cash and cash equivalents (30 ) (2,081 ) |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Feb. 29, 2016 | |
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 Nine months ended February 29, 2016 February 28, 2015 February 29, 2016 February 28, 2015 Basic earnings per share Numerator: Net income attributable to Mistras Group, Inc. $ 3,593 $ 1,817 $ 21,890 $ 13,910 Denominator: Weighted average common shares outstanding 28,906 28,656 28,832 28,583 Basic earnings per share $ 0.12 $ 0.06 $ 0.76 $ 0.49 Diluted earnings per share: Numerator: Net income attributable to Mistras Group, Inc. $ 3,593 $ 1,817 $ 21,890 $ 13,910 Denominator: Weighted average common shares outstanding 28,906 28,656 28,832 28,583 Dilutive effect of stock options outstanding 739 694 657 742 Dilutive effect of restricted stock units outstanding 254 179 271 234 29,899 29,529 29,760 29,559 Diluted earnings per share $ 0.12 $ 0.06 $ 0.74 $ 0.47 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Feb. 29, 2016 | |
Business Combinations [Abstract] | |
Schedule of Preliminary Purchase Price Allocation | 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 2016 Number of Entities 1 Consideration transferred: Cash paid $ 1,750 Contingent consideration 945 Consideration transferred 2,695 Current assets 145 Property, plant and equipment 485 Goodwill 2,658 Current liabilities (521 ) Long-term deferred tax liability (72 ) Net assets acquired $ 2,695 |
Accounts Receivable, net (Table
Accounts Receivable, net (Tables) | 9 Months Ended |
Feb. 29, 2016 | |
Receivables [Abstract] | |
Schedule of accounts receivable | Accounts receivable consisted of the following: February 29, 2016 May 31, 2015 Trade accounts receivable $ 132,340 $ 136,208 Allowance for doubtful accounts (3,735 ) (2,980 ) Accounts receivable, net $ 128,605 $ 133,228 |
Property, Plant and Equipment25
Property, Plant and Equipment, net (Tables) | 9 Months Ended |
Feb. 29, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, plant and equipment | Property, plant and equipment consisted of the following: Useful Life (Years) February 29, 2016 May 31, 2015 Land $ 1,719 $ 1,856 Buildings and improvements 30-40 18,534 17,712 Office furniture and equipment 5-8 8,653 8,084 Machinery and equipment 5-7 166,379 162,612 195,285 190,264 Accumulated depreciation and amortization (119,620 ) (111,008 ) Property, plant and equipment, net $ 75,665 $ 79,256 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Feb. 29, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in the carrying amount of goodwill by segment is shown below: Services International Products Total Balance at May 31, 2014 $ 73,767 $ 43,552 $ 13,197 $ 130,516 Goodwill acquired during the year 41,986 1,480 — 43,466 Adjustments to preliminary purchase price allocations 3,529 (367 ) — 3,162 Foreign currency translation (2,003 ) (8,727 ) — (10,730 ) Balance at May 31, 2015 $ 117,279 $ 35,938 $ 13,197 $ 166,414 Goodwill acquired (disposed) during the year 2,658 (374 ) — 2,284 Adjustments to preliminary purchase price allocations 271 — — 271 Foreign currency translation (1,034 ) (1,216 ) — (2,250 ) Balance at February 29, 2016 $ 119,174 $ 34,348 $ 13,197 $ 166,719 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Feb. 29, 2016 | |
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 were as follows: February 29, 2016 May 31, 2015 Useful Life (Years) Gross Amount Accumulated Amortization Net Carrying Amount Gross Amount Accumulated Amortization Net Carrying Amount Customer relationships 5-12 $ 79,577 $ (45,469 ) $ 34,108 $ 81,101 $ (41,009 ) $ 40,092 Software/Technology 3-15 17,055 (11,377 ) 5,678 15,738 (10,290 ) 5,448 Covenants not to compete 2-5 11,618 (9,102 ) 2,516 11,678 (8,605 ) 3,073 Other 2-5 6,820 (4,791 ) 2,029 6,910 (4,247 ) 2,663 Total $ 115,070 $ (70,739 ) $ 44,331 $ 115,427 $ (64,151 ) $ 51,276 |
Accrued Expenses and Other Cu28
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Feb. 29, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following: February 29, 2016 May 31, 2015 Accrued salaries, wages and related employee benefits $ 27,274 $ 26,053 Contingent consideration, current portion 1,508 3,543 Accrued workers’ compensation and health benefits 5,933 3,630 Deferred revenue 4,302 3,841 Other accrued expenses 14,167 18,847 Total accrued expenses and other liabilities $ 53,184 $ 55,914 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Feb. 29, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt consisted of the following: February 29, 2016 May 31, 2015 Senior credit facility $ 71,528 $ 83,062 Notes payable 10,368 24,933 Other 5,470 5,464 Total debt 87,366 113,459 Less: Current portion (12,488 ) (17,902 ) Long-term debt, net of current portion $ 74,878 $ 95,557 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Feb. 29, 2016 | |
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 29, 2016 Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ 3,808 $ 3,808 Total Liabilities $ — $ — $ 3,808 $ 3,808 May 31, 2015 Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ 6,411 $ 6,411 Total Liabilities $ — $ — $ 6,411 $ 6,411 |
Segment Disclosure (Tables)
Segment Disclosure (Tables) | 9 Months Ended |
Feb. 29, 2016 | |
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 Nine months ended February 29, 2016 February 28, 2015 February 29, 2016 February 28, 2015 Revenues Services $ 123,616 $ 121,845 $ 411,484 $ 404,651 International 31,801 33,554 107,085 114,610 Products and Systems 6,866 8,526 23,343 22,588 Corporate and eliminations (1,928 ) (825 ) (6,918 ) (5,283 ) $ 160,355 $ 163,100 $ 534,994 $ 536,566 Three months ended Nine months ended February 29, 2016 February 28, 2015 February 29, 2016 February 28, 2015 Gross profit Services $ 30,256 $ 27,429 $ 107,943 $ 101,452 International 9,227 7,018 32,113 27,795 Products and Systems 3,202 4,211 10,957 10,203 Corporate and eliminations 124 76 (5 ) 317 $ 42,809 $ 38,734 $ 151,008 $ 139,767 Three months ended Nine months ended February 29, 2016 February 28, 2015 February 29, 2016 February 28, 2015 Income (loss) from operations Services $ 10,071 $ 7,257 $ 44,285 $ 36,208 International 1,136 (1,315 ) 6,925 1,163 Products and Systems 438 1,346 2,677 1,330 Corporate and eliminations (5,887 ) (3,418 ) (15,628 ) (12,975 ) $ 5,758 $ 3,870 $ 38,259 $ 25,726 Income (loss) by operating segment includes intercompany transactions, which are eliminated in Corporate and eliminations. Three months ended Nine months ended February 29, 2016 February 28, 2015 February 29, 2016 February 28, 2015 Depreciation and amortization Services $ 5,556 $ 5,658 $ 16,640 $ 16,622 International 1,876 1,919 5,762 6,130 Products and Systems 587 608 1,727 1,809 Corporate and eliminations (88 ) (71 ) (275 ) 218 $ 7,931 $ 8,114 $ 23,854 $ 24,779 February 29, 2016 May 31, 2015 Goodwill Services $ 119,174 $ 117,279 International 34,348 35,938 Products and Systems 13,197 13,197 $ 166,719 $ 166,414 February 29, 2016 May 31, 2015 Total assets Services $ 300,553 $ 301,031 International 122,669 126,643 Products and Systems 32,753 35,464 Corporate and eliminations 7,982 8,589 $ 463,957 $ 471,727 |
Schedule of revenues by geographic area | Revenues by geographic area for the three and nine months ended February 29, 2016 and 2015 , respectively, were as follows: Three months ended Nine months ended February 29, 2016 February 28, 2015 February 29, 2016 February 28, 2015 Revenues United States $ 109,518 $ 113,664 $ 371,929 $ 365,912 Other Americas 17,162 14,353 52,248 53,917 Europe 29,706 31,644 100,411 106,370 Asia-Pacific 3,969 3,439 10,406 10,367 $ 160,355 $ 163,100 $ 534,994 $ 536,566 |
Description of Business and B32
Description of Business and Basis of Presentation - Immaterial Correction (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Accounts payable | $ (66) | $ (8,037) |
Accrued expenses and other liabilities | 1,197 | (4,594) |
Net cash provided by operating activities | 55,802 | 34,516 |
Acquisition of businesses, net of cash acquired | (1,709) | (34,671) |
Net cash used in investing activities | (12,968) | (46,137) |
Proceeds from borrowings of long-term debt | 2,293 | 1,145 |
Repayment of long-term debt | (16,991) | (11,741) |
Net borrowings against revolver | 37,100 | |
Net cash provided by financing activities | (34,338) | 17,067 |
Effect of exchange rate changes on cash and cash equivalents | $ (956) | (2,081) |
Previously Reported | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Accounts payable | (7,741) | |
Accrued expenses and other liabilities | (5,089) | |
Net cash provided by operating activities | 34,317 | |
Acquisition of businesses, net of cash acquired | (34,967) | |
Net cash used in investing activities | (46,433) | |
Proceeds from borrowings of long-term debt | 0 | |
Repayment of long-term debt | (10,596) | |
Net borrowings against revolver | 35,544 | |
Net cash provided by financing activities | 15,511 | |
Effect of exchange rate changes on cash and cash equivalents | $ (30) |
Description of Business and B33
Description of Business and Basis of Presentation - Additional Information (Details) - mo | 3 Months Ended | 9 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | |
Principles of Consolidation | |||
Period lag in the consolidation of International segment subsidiaries (months) | 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 (months) | 1 | ||
Decrease in effective tax rate (as a percent) | 11.00% | 8.00% |
Share-Based Compensation - Stoc
Share-Based Compensation - Stock Options (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2016USD ($)shares | Feb. 28, 2015USD ($) | Feb. 29, 2016USD ($)planshares | Feb. 28, 2015USD ($)shares | |
Share-based compensation | ||||
Number of employee stock ownership plans (plan) | plan | 2 | |||
Stock Options | ||||
Share-based compensation | ||||
Recognized share-based compensation expense (less than) | $ | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 |
Unrecognized compensation costs, net of estimated forfeitures (less than) | $ | $ 0.1 | $ 0.1 | ||
Weighted-average period over which unrecognized compensation cost is expected to be recognized (years) | 1 month | |||
Stock options granted (in shares) | shares | 0 | 0 | ||
2007 Plan | ||||
Share-based compensation | ||||
Number of awards that may be granted (in shares) | shares | 0 | 0 |
Share-Based Compensation - Rest
Share-Based Compensation - Restricted Stock Unit Awards (Details) - Restricted Stock Units shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2016USD ($) | Feb. 28, 2015USD ($) | Feb. 29, 2016USD ($)directorshares | Feb. 28, 2015USD ($)directorshares | |
Share-based compensation | ||||
Recognized share-based compensation expense (benefit) | $ 1.1 | $ 1.2 | $ 3.3 | $ 3.5 |
Unrecognized compensation cost, net of estimated forfeitures | $ 8.3 | $ 8.3 | ||
Weighted-average period over which unrecognized compensation cost is expected to be recognized (years) | 2 years 4 months 2 days | |||
Fair value of shares vested | $ 3.5 | $ 5.2 | ||
Shares vested (in shares) | shares | 220 | 231 | ||
Non-employee directors | ||||
Share-based compensation | ||||
Number of fully vested common stock granted (in shares) | shares | 28 | 21 | ||
Number of non-employee directors to whom fully vested common stock is granted (director) | director | 5 | 5 | ||
Fair value of shares vested | $ 0.5 | $ 0.4 |
Share-Based Compensation - Perf
Share-Based Compensation - Performance Restricted Stock Units (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Feb. 29, 2016USD ($)shares | Nov. 30, 2015shares | Aug. 31, 2015shares | Feb. 28, 2015USD ($) | Nov. 30, 2014 | Feb. 28, 2014 | Feb. 29, 2016USD ($)performance_metricshares | Feb. 28, 2015USD ($) | |
Performance Shares [Member] | Fiscal 2016 Grants | ||||||||
Share-based compensation | ||||||||
Performance period (years) | 1 year | |||||||
Requisite service period (years) | 5 years | |||||||
Number of performance award metrics | performance_metric | 3 | |||||||
Recognized share-based compensation expense (benefit) | $ | $ 0.4 | $ (0.8) | $ 1.2 | $ 0.9 | ||||
Unrecognized compensation cost | $ | $ 3.4 | $ 3.4 | ||||||
Weighted-average period over which unrecognized compensation cost is expected to be recognized (years) | 3 years 10 months 2 days | |||||||
Performance Shares [Member] | Fiscal 2016 Grants | Executive and Senior Officers | ||||||||
Share-based compensation | ||||||||
Number of shares granted in period (in shares) | shares | 0 | 80,000 | 154,000 | |||||
Nonvested shares outstanding (in shares) | shares | 234,000 | 234,000 | 234,000 | |||||
Performance Restricted Stock Units with one year EPS performance condition | Fiscal 2014 Grants | ||||||||
Share-based compensation | ||||||||
Performance period (years) | 1 year | |||||||
Performance Restricted Stock Units with two year EPS performance condition | Fiscal 2014 Grants | ||||||||
Share-based compensation | ||||||||
Performance period (years) | 2 years | |||||||
Performance Restricted Stock Units with three year EPS performance condition | Fiscal 2014 Grants | ||||||||
Share-based compensation | ||||||||
Performance period (years) | 3 years | |||||||
Performance Restricted Stock Units with three year EPS performance condition | Fiscal 2015 Grants | ||||||||
Share-based compensation | ||||||||
Performance period (years) | 3 years |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Basic earnings per share | ||||
Net income attributable to Mistras Group, Inc. | $ 3,593 | $ 1,817 | $ 21,890 | $ 13,910 |
Denominator: | ||||
Weighted average common shares outstanding (in shares) | 28,906 | 28,656 | 28,832 | 28,583 |
Basic earnings per share (in dollars per share) | $ 0.12 | $ 0.06 | $ 0.76 | $ 0.49 |
Denominator: | ||||
Weighted average common shares outstanding (in shares) | 28,906 | 28,656 | 28,832 | 28,583 |
Dilutive effect of stock options outstanding (in shares) | 739 | 694 | 657 | 742 |
Dilutive effect of restricted stock units outstanding (in shares) | 254 | 179 | 271 | 234 |
Weighted average common shares outstanding, diluted (in shares) | 29,899 | 29,529 | 29,760 | 29,559 |
Diluted earnings per share (in dollars per share) | $ 0.12 | $ 0.06 | $ 0.74 | $ 0.47 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) | 9 Months Ended | |||
Feb. 29, 2016USD ($)Entity | Feb. 28, 2015USD ($)Entity | May. 31, 2015USD ($) | May. 31, 2014USD ($) | |
Acquisitions | ||||
Fair value of contingent consideration liabilities (less than) | $ 3,800,000 | $ 6,400,000 | ||
Period over which potential acquisition-related contingent consideration would be payable | 3 years 4 months | |||
Goodwill | $ 166,719,000 | $ 166,414,000 | $ 130,516,000 | |
Fiscal 2015 Acquisitions | ||||
Acquisitions | ||||
Number of Entities | Entity | 4 | |||
Percentage of common stock acquired | 100.00% | |||
Cash paid | $ 35,700,000 | |||
Notes payable issued as part of acquisition | 20,500,000 | |||
Goodwill | $ 45,200,000 | |||
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 | |||
United States | Fiscal 2016 Acquisitions | ||||
Acquisitions | ||||
Number of Entities | Entity | 1 | |||
Percentage of common stock acquired | 100.00% | |||
Cash paid | $ 1,750,000 | |||
Fair value of contingent consideration liabilities (less than) | 945,000 | |||
Goodwill | $ 2,658,000 | |||
Quebec and Florida | Fiscal 2015 Acquisitions | ||||
Acquisitions | ||||
Fair value of contingent consideration liabilities (less than) | $ 3,200,000 | |||
Quebec and Florida | Fiscal 2015 Acquisitions | Minimum | ||||
Acquisitions | ||||
Period over which potential acquisition-related contingent consideration would be payable | 2 years | |||
Quebec and Florida | Fiscal 2015 Acquisitions | Maximum | ||||
Acquisitions | ||||
Period over which potential acquisition-related contingent consideration would be payable | 3 years |
Acquisitions - Preliminary Purc
Acquisitions - Preliminary Purchase Price Allocation (Details) $ in Thousands | 9 Months Ended | ||
Feb. 29, 2016USD ($)Entity | May. 31, 2015USD ($) | May. 31, 2014USD ($) | |
Acquisitions | |||
Contingent consideration | $ 3,800 | $ 6,400 | |
Goodwill | $ 166,719 | $ 166,414 | $ 130,516 |
United States | Fiscal 2016 Acquisitions | |||
Acquisitions | |||
Number of Entities | Entity | 1 | ||
Cash paid | $ 1,750 | ||
Contingent consideration | 945 | ||
Consideration transferred | 2,695 | ||
Current assets | 145 | ||
Property, plant and equipment | 485 | ||
Goodwill | 2,658 | ||
Current liabilities | (521) | ||
Long-term deferred tax liability | (72) | ||
Net assets acquired | $ 2,695 |
Acquisitions - Acquisition-Rela
Acquisitions - Acquisition-Related Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | May. 31, 2015 | |
Acquisitions | |||||
Decrease of acquisition-related contingent consideration liabilities | $ (1,292) | $ (3,266) | |||
Acquisition related costs | $ 100 | $ 200 | 200 | 200 | |
Contingent consideration | 3,800 | 3,800 | $ 6,400 | ||
Fiscal 2016 Acquisitions | |||||
Acquisitions | |||||
Decrease of acquisition-related contingent consideration liabilities | $ 200 | $ 1,300 | |||
Fiscal 2015 Acquisitions | |||||
Acquisitions | |||||
Decrease of acquisition-related contingent consideration liabilities | $ 1,700 | $ 3,300 |
Accounts Receivable, net (Detai
Accounts Receivable, net (Details) - USD ($) $ in Thousands | Feb. 29, 2016 | May. 31, 2015 |
Receivables [Abstract] | ||
Trade accounts receivable | $ 132,340 | $ 136,208 |
Allowance for doubtful accounts | (3,735) | (2,980) |
Accounts receivable, net | $ 128,605 | $ 133,228 |
Property, Plant and Equipment42
Property, Plant and Equipment, net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | May. 31, 2015 | |
Property, Plant and Equipment, net | |||||
Property, plant and equipment, gross | $ 195,285 | $ 195,285 | $ 190,264 | ||
Accumulated depreciation and amortization | (119,620) | (119,620) | (111,008) | ||
Property, plant and equipment, net | 75,665 | 75,665 | 79,256 | ||
Depreciation expense | 5,500 | $ 5,400 | 16,700 | $ 16,300 | |
Land | |||||
Property, Plant and Equipment, net | |||||
Property, plant and equipment, gross | 1,719 | 1,719 | 1,856 | ||
Buildings and improvements | |||||
Property, Plant and Equipment, net | |||||
Property, plant and equipment, gross | 18,534 | $ 18,534 | 17,712 | ||
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 | 8,653 | $ 8,653 | 8,084 | ||
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 | $ 166,379 | $ 166,379 | $ 162,612 | ||
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 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Feb. 29, 2016 | May. 31, 2015 | May. 31, 2014 | |
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | $ 166,414 | $ 130,516 | |
Goodwill acquired (disposed) during the year | 2,284 | 43,466 | |
Adjustments to preliminary purchase price allocations | 271 | 3,162 | |
Foreign currency translation | (2,250) | (10,730) | |
Goodwill, ending balance | 166,719 | 166,414 | |
Services | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | 117,279 | 73,767 | |
Goodwill acquired (disposed) during the year | 2,658 | 41,986 | |
Adjustments to preliminary purchase price allocations | 271 | 3,529 | |
Foreign currency translation | (1,034) | (2,003) | |
Goodwill, ending balance | 119,174 | 117,279 | |
International | |||
Goodwill [Line Items] | |||
Goodwill, cumulative impairment loss | 9,900 | 9,900 | $ 9,900 |
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | 35,938 | 43,552 | |
Goodwill acquired (disposed) during the year | (374) | 1,480 | |
Adjustments to preliminary purchase price allocations | 0 | (367) | |
Foreign currency translation | (1,216) | (8,727) | |
Goodwill, ending balance | 34,348 | 35,938 | |
Products and Systems | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | 13,197 | 13,197 | |
Goodwill acquired (disposed) during the year | 0 | 0 | |
Adjustments to preliminary purchase price allocations | 0 | 0 | |
Foreign currency translation | 0 | 0 | |
Goodwill, ending balance | $ 13,197 | $ 13,197 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | May. 31, 2015 | |
Intangible assets | |||||
Gross Amount | $ 115,070 | $ 115,070 | $ 115,427 | ||
Accumulated Amortization | (70,739) | (70,739) | (64,151) | ||
Net Carrying Amount | 44,331 | 44,331 | 51,276 | ||
Amortization expense | 2,400 | $ 2,700 | 7,200 | $ 8,500 | |
Customer relationships | |||||
Intangible assets | |||||
Gross Amount | 79,577 | 79,577 | 81,101 | ||
Accumulated Amortization | (45,469) | (45,469) | (41,009) | ||
Net Carrying Amount | 34,108 | $ 34,108 | 40,092 | ||
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 | 17,055 | $ 17,055 | 15,738 | ||
Accumulated Amortization | (11,377) | (11,377) | (10,290) | ||
Net Carrying Amount | 5,678 | $ 5,678 | 5,448 | ||
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 | 11,618 | $ 11,618 | 11,678 | ||
Accumulated Amortization | (9,102) | (9,102) | (8,605) | ||
Net Carrying Amount | 2,516 | $ 2,516 | 3,073 | ||
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 | 6,820 | $ 6,820 | 6,910 | ||
Accumulated Amortization | (4,791) | (4,791) | (4,247) | ||
Net Carrying Amount | $ 2,029 | $ 2,029 | $ 2,663 | ||
Other | Minimum | |||||
Intangible assets | |||||
Useful Life (Years) | 2 years | ||||
Other | Maximum | |||||
Intangible assets | |||||
Useful Life (Years) | 5 years |
Accrued Expenses and Other Cu45
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Feb. 29, 2016 | May. 31, 2015 |
Payables and Accruals [Abstract] | ||
Accrued salaries, wages and related employee benefits | $ 27,274 | $ 26,053 |
Contingent consideration, current portion | 1,508 | 3,543 |
Accrued workers’ compensation and health benefits | 5,933 | 3,630 |
Deferred revenue | 4,302 | 3,841 |
Other accrued expenses | 14,167 | 18,847 |
Total accrued expenses and other liabilities | $ 53,184 | $ 55,914 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Feb. 29, 2016 | May. 31, 2015 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 87,366 | $ 113,459 |
Less: Current portion | (12,488) | (17,902) |
Long-term debt, net of current portion | 74,878 | 95,557 |
Senior credit facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | 71,528 | 83,062 |
Notes payable | ||
Debt Instrument [Line Items] | ||
Long-term debt | 10,368 | 24,933 |
Other | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 5,470 | $ 5,464 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Details) | Oct. 31, 2014USD ($)Quarter | Feb. 29, 2016USD ($) |
Senior credit facility | ||
Senior Credit Facility | ||
Maximum borrowing capacity | $ 175,000,000 | |
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 | $ 71,500,000 | |
Outstanding letters of credit | $ 4,500,000 | |
Number of consecutive fiscal quarters used for calculating Funded Debt Leverage Ratio | Quarter | 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) | 3.25 | |
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) | (0.375%) | |
Senior credit facility | Base rate | Maximum | ||
Senior Credit Facility | ||
Margin (as a percent) | (1.25%) | |
Notes payable | ||
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% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Feb. 29, 2016 | May. 31, 2015 |
Liabilities: | ||
Contingent consideration | $ 3,800 | $ 6,400 |
Recurring basis | ||
Liabilities: | ||
Contingent consideration | 3,808 | 6,411 |
Total Liabilities | 3,808 | 6,411 |
Recurring basis | Level 1 | ||
Liabilities: | ||
Contingent consideration | 0 | 0 |
Total Liabilities | 0 | 0 |
Recurring basis | Level 2 | ||
Liabilities: | ||
Contingent consideration | 0 | 0 |
Total Liabilities | 0 | 0 |
Recurring basis | Level 3 | ||
Liabilities: | ||
Contingent consideration | 3,808 | 6,411 |
Total Liabilities | $ 3,808 | $ 6,411 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 1 Months Ended | 9 Months Ended |
Apr. 30, 2015claim | Feb. 29, 2016USD ($)claim | |
Litigation | ||
Period over which potential acquisition-related contingent consideration would be payable | 3 years 4 months | |
Uninsured risk | ||
Litigation | ||
Number of claims filed | claim | 2 | |
Lawsuits for alleged quality defects | ||
Litigation | ||
Number of claims filed | claim | 0 | |
Acquisition-related contingencies | ||
Litigation | ||
Potential acquisition-related contingent consideration, low end of range | $ | $ 0 | |
Potential acquisition-related contingent consideration, high end of range | $ | $ 17,800,000 |
Segment Disclosure - Financial
Segment Disclosure - Financial Information by Segment (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Feb. 29, 2016USD ($) | Feb. 28, 2015USD ($) | Feb. 29, 2016USD ($)segment | Feb. 28, 2015USD ($) | May. 31, 2015USD ($) | May. 31, 2014USD ($) | |
Segment Reporting [Abstract] | ||||||
Number of operating segments | segment | 3 | |||||
Financial information by segment | ||||||
Revenues | $ 160,355 | $ 163,100 | $ 534,994 | $ 536,566 | ||
Gross profit | 42,809 | 38,734 | 151,008 | 139,767 | ||
Income (loss) from operations | 5,758 | 3,870 | 38,259 | 25,726 | ||
Depreciation and amortization | 7,931 | 8,114 | 23,854 | 24,779 | ||
Goodwill | 166,719 | 166,719 | $ 166,414 | $ 130,516 | ||
Total assets | 463,957 | 463,957 | 471,727 | |||
Corporate and eliminations | ||||||
Financial information by segment | ||||||
Revenues | (1,928) | (825) | (6,918) | (5,283) | ||
Gross profit | 124 | 76 | (5) | 317 | ||
Income (loss) from operations | (5,887) | (3,418) | (15,628) | (12,975) | ||
Depreciation and amortization | (88) | (71) | (275) | 218 | ||
Total assets | 7,982 | 7,982 | 8,589 | |||
Services | ||||||
Financial information by segment | ||||||
Goodwill | 119,174 | 119,174 | 117,279 | 73,767 | ||
Services | Operating segments | ||||||
Financial information by segment | ||||||
Revenues | 123,616 | 121,845 | 411,484 | 404,651 | ||
Gross profit | 30,256 | 27,429 | 107,943 | 101,452 | ||
Income (loss) from operations | 10,071 | 7,257 | 44,285 | 36,208 | ||
Depreciation and amortization | 5,556 | 5,658 | 16,640 | 16,622 | ||
Goodwill | 119,174 | 119,174 | 117,279 | |||
Total assets | 300,553 | 300,553 | 301,031 | |||
International | ||||||
Financial information by segment | ||||||
Goodwill | 34,348 | 34,348 | 35,938 | 43,552 | ||
International | Operating segments | ||||||
Financial information by segment | ||||||
Revenues | 31,801 | 33,554 | 107,085 | 114,610 | ||
Gross profit | 9,227 | 7,018 | 32,113 | 27,795 | ||
Income (loss) from operations | 1,136 | (1,315) | 6,925 | 1,163 | ||
Depreciation and amortization | 1,876 | 1,919 | 5,762 | 6,130 | ||
Goodwill | 34,348 | 34,348 | 35,938 | |||
Total assets | 122,669 | 122,669 | 126,643 | |||
Products and Systems | ||||||
Financial information by segment | ||||||
Goodwill | 13,197 | 13,197 | 13,197 | $ 13,197 | ||
Products and Systems | Operating segments | ||||||
Financial information by segment | ||||||
Revenues | 6,866 | 8,526 | 23,343 | 22,588 | ||
Gross profit | 3,202 | 4,211 | 10,957 | 10,203 | ||
Income (loss) from operations | 438 | 1,346 | 2,677 | 1,330 | ||
Depreciation and amortization | 587 | $ 608 | 1,727 | $ 1,809 | ||
Goodwill | 13,197 | 13,197 | 13,197 | |||
Total assets | $ 32,753 | $ 32,753 | $ 35,464 |
Segment Disclosure - Revenues b
Segment Disclosure - Revenues by Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Revenue and long-lived assets by geographic area | ||||
Revenues | $ 160,355 | $ 163,100 | $ 534,994 | $ 536,566 |
United States | ||||
Revenue and long-lived assets by geographic area | ||||
Revenues | 109,518 | 113,664 | 371,929 | 365,912 |
Other Americas | ||||
Revenue and long-lived assets by geographic area | ||||
Revenues | 17,162 | 14,353 | 52,248 | 53,917 |
Europe | ||||
Revenue and long-lived assets by geographic area | ||||
Revenues | 29,706 | 31,644 | 100,411 | 106,370 |
Asia-Pacific | ||||
Revenue and long-lived assets by geographic area | ||||
Revenues | $ 3,969 | $ 3,439 | $ 10,406 | $ 10,367 |