Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 31, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-34481 | |
Entity Registrant Name | Mistras Group, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 22-3341267 | |
Entity Address, Address Line One | 195 Clarksville Road | |
Entity Address, City or Town | Princeton Junction, | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 08550 | |
City Area Code | 609 | |
Local Phone Number | 716-4000 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | MG | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 29,192,562 | |
Entity Central Index Key | 0001436126 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash and cash equivalents | $ 22,116 | $ 15,016 |
Accounts receivable, net | 114,090 | 135,997 |
Inventories | 14,902 | 13,413 |
Prepaid expenses and other current assets | 16,699 | 14,729 |
Total current assets | 167,807 | 179,155 |
Property, plant and equipment, net | 91,771 | 98,607 |
Intangible assets, net | 69,389 | 109,537 |
Goodwill | 201,623 | 282,410 |
Deferred income taxes | 1,811 | 1,786 |
Other assets | 48,374 | 48,383 |
Total assets | 580,775 | 719,878 |
Current Liabilities | ||
Accounts payable | 12,588 | 15,033 |
Accrued expenses and other current liabilities | 78,415 | 81,389 |
Current portion of long-term debt | 9,889 | 6,593 |
Current portion of finance lease obligations | 3,651 | 4,131 |
Income taxes payable | 1,737 | 2,094 |
Total current liabilities | 106,280 | 109,240 |
Long-term debt, net of current portion | 226,617 | 248,120 |
Obligations under finance leases, net of current portion | 11,291 | 13,043 |
Deferred income taxes | 4,219 | 21,290 |
Other long-term liabilities | 46,841 | 42,163 |
Total liabilities | 395,248 | 433,856 |
Commitments and contingencies | ||
Equity | ||
Preferred stock, 10,000,000 shares authorized | 0 | 0 |
Common stock, $0.01 par value, 200,000,000 shares authorized, 29,191,876 and 28,945,472 shares issued and outstanding | 292 | 289 |
Additional paid-in capital | 233,267 | 229,205 |
Retained earnings (deficit) | (22,029) | 77,613 |
Accumulated other comprehensive loss | (26,209) | (21,285) |
Total Mistras Group, Inc. stockholders’ equity | 185,321 | 285,822 |
Non-controlling interests | 206 | 200 |
Total equity | 185,527 | 286,022 |
Total liabilities and equity | $ 580,775 | $ 719,878 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
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 |
Common stock, shares issued (in shares) | 29,191,876 | 28,945,472 |
Common stock, shares outstanding (in shares) | 29,191,876 | 28,945,472 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Statements of Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenue | $ 147,894 | $ 192,192 | $ 431,794 | $ 569,595 |
Cost of revenue | 94,930 | 129,241 | 286,208 | 386,721 |
Depreciation | 5,580 | 5,182 | 16,400 | 16,160 |
Gross profit | 47,384 | 57,769 | 129,186 | 166,714 |
Selling, general and administrative expenses | 37,113 | 42,328 | 116,278 | 126,014 |
Bad debt provision for troubled customers, net of recoveries | 0 | 0 | 0 | 2,798 |
Impairment charges | 0 | 0 | 106,062 | 0 |
Pension withdrawal expense | 0 | (45) | 0 | 489 |
Research and engineering | 638 | 650 | 2,170 | 2,261 |
Depreciation and amortization | 3,182 | 4,089 | 10,359 | 12,380 |
Acquisition-related expense (benefit), net | 709 | (32) | 186 | 970 |
Income (loss) from operations | 5,742 | 10,779 | (105,869) | 21,802 |
Interest expense | 3,645 | 2,959 | 9,410 | 10,065 |
Income (loss) before provision (benefit) for income taxes | 2,097 | 7,820 | (115,279) | 11,737 |
Provision (benefit) for income taxes | 544 | 4,733 | (15,645) | 6,493 |
Net income (loss) | 1,553 | 3,087 | (99,634) | 5,244 |
Less: Net income (loss) attributable to non-controlling interests, net of taxes | 30 | (6) | 8 | 13 |
Net income (loss) attributable to Mistras Group, Inc. | $ 1,523 | $ 3,093 | $ (99,642) | $ 5,231 |
Earnings (loss) per common share: | ||||
Basic (in dollars per share) | $ 0.05 | $ 0.11 | $ (3.43) | $ 0.18 |
Diluted (in dollars per share) | $ 0.05 | $ 0.11 | $ (3.43) | $ 0.18 |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 29,177 | 28,800 | 29,086 | 28,678 |
Diluted (in shares) | 29,311 | 29,156 | 29,086 | 29,022 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 1,553 | $ 3,087 | $ (99,634) | $ 5,244 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 5,963 | (5,425) | (4,924) | 355 |
Comprehensive income (loss) | 7,516 | (2,338) | (104,558) | 5,599 |
Less: comprehensive income (loss) attributable to non-controlling interest | 34 | (8) | 6 | 11 |
Comprehensive income (loss) attributable to Mistras Group, Inc. | $ 7,482 | $ (2,330) | $ (104,564) | $ 5,588 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands | Total | Total Mistras Group, Inc. Stockholders’ Equity | Common Stock | Additional paid-in capital | Retained earnings (deficit) | Accumulated other comprehensive income (loss) | Noncontrolling Interest |
Beginning balance (in shares) at Dec. 31, 2018 | 28,563 | ||||||
Beginning balance at Dec. 31, 2018 | $ 271,074 | $ 270,897 | $ 285 | $ 226,616 | $ 71,553 | $ (27,557) | $ 177 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 5,244 | 5,231 | 5,231 | 13 | |||
Other comprehensive income (loss), net of tax | 353 | 355 | 355 | (2) | |||
Share-based payments | 4,598 | 4,598 | 4,598 | ||||
Net settlement of options and restricted stock units (in shares) | 349 | ||||||
Net settlement of options and restricted stock units | $ (2,955) | (2,955) | $ 4 | (2,959) | |||
Exercise of stock options (in shares) | 2,093 | 3 | |||||
Exercise of stock options | $ 32 | 32 | 32 | ||||
Ending balance (in shares) at Sep. 30, 2019 | 28,915 | ||||||
Ending balance at Sep. 30, 2019 | 278,346 | 278,158 | $ 289 | 228,287 | 76,784 | (27,202) | 188 |
Beginning balance (in shares) at Jun. 30, 2019 | 28,685 | ||||||
Beginning balance at Jun. 30, 2019 | 281,279 | 281,083 | $ 286 | 228,883 | 73,691 | (21,777) | 196 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 3,087 | 3,093 | 3,093 | (6) | |||
Other comprehensive income (loss), net of tax | (5,427) | (5,425) | (5,425) | (2) | |||
Share-based payments | 1,682 | 1,682 | 1,682 | ||||
Net settlement of options and restricted stock units (in shares) | 230 | ||||||
Net settlement of options and restricted stock units | (2,275) | (2,275) | $ 3 | (2,278) | |||
Ending balance (in shares) at Sep. 30, 2019 | 28,915 | ||||||
Ending balance at Sep. 30, 2019 | 278,346 | 278,158 | $ 289 | 228,287 | 76,784 | (27,202) | 188 |
Beginning balance (in shares) at Dec. 31, 2019 | 28,945 | ||||||
Beginning balance at Dec. 31, 2019 | 286,022 | 285,822 | $ 289 | 229,205 | 77,613 | (21,285) | 200 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | (99,634) | (99,642) | (99,642) | 8 | |||
Other comprehensive income (loss), net of tax | (4,926) | (4,924) | (4,924) | (2) | |||
Share-based payments | 4,391 | 4,391 | 4,391 | ||||
Net settlement of options and restricted stock units (in shares) | 247 | ||||||
Net settlement of options and restricted stock units | $ (326) | (326) | $ 3 | (329) | |||
Exercise of stock options (in shares) | 0 | ||||||
Ending balance (in shares) at Sep. 30, 2020 | 29,192 | ||||||
Ending balance at Sep. 30, 2020 | $ 185,527 | 185,321 | $ 292 | 233,267 | (22,029) | (26,209) | 206 |
Beginning balance (in shares) at Jun. 30, 2020 | 29,110 | ||||||
Beginning balance at Jun. 30, 2020 | 176,463 | 176,291 | $ 291 | 231,724 | (23,552) | (32,172) | 172 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 1,553 | 1,523 | 1,523 | 30 | |||
Other comprehensive income (loss), net of tax | 5,967 | 5,963 | 5,963 | 4 | |||
Share-based payments | 1,593 | 1,593 | 1,593 | ||||
Net settlement of options and restricted stock units (in shares) | 82 | ||||||
Net settlement of options and restricted stock units | (49) | (49) | $ 1 | (50) | |||
Ending balance (in shares) at Sep. 30, 2020 | 29,192 | ||||||
Ending balance at Sep. 30, 2020 | $ 185,527 | $ 185,321 | $ 292 | $ 233,267 | $ (22,029) | $ (26,209) | $ 206 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities | ||
Net loss | $ (99,634) | $ 5,244 |
Adjustments to reconcile net loss to net cash provided by operating activities | ||
Depreciation and amortization | 26,759 | 28,540 |
Impairment charges | 106,062 | 0 |
Deferred income taxes | (16,831) | 3,151 |
Share-based compensation expense | 4,312 | 4,598 |
Bad debt provision for troubled customers, net of recoveries | 0 | 2,798 |
Fair value adjustments to contingent consideration | 186 | 537 |
Foreign currency (gain) loss | 1,965 | (1,010) |
Other | 2,419 | (143) |
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions | ||
Accounts receivable | 20,319 | (3,098) |
Inventories | (1,845) | (391) |
Prepaid expenses and other assets | (2,305) | 439 |
Accounts payable | (2,357) | (261) |
Accrued expenses and other liabilities | 3,069 | (2,465) |
Income taxes payable | (328) | 2,537 |
Net cash provided by operating activities | 41,791 | 40,476 |
Cash flows from investing activities | ||
Purchase of property, plant and equipment | (10,676) | (17,275) |
Purchase of intangible assets | (311) | (704) |
Acquisition of business, net of cash acquired | 0 | (4,822) |
Proceeds from sale of equipment | 429 | 1,173 |
Net cash used in investing activities | (10,558) | (21,628) |
Cash flows from financing activities | ||
Repayment of finance lease obligations | (3,078) | (3,338) |
Proceeds from borrowings of long-term debt | 2,245 | 684 |
Repayment of long-term debt | (4,334) | (5,189) |
Proceeds from revolver | 27,250 | 20,500 |
Repayment of revolver | (44,000) | (38,500) |
Payment of financing costs | (1,497) | 0 |
Payment of contingent consideration for business acquisitions | (1,337) | (755) |
Taxes paid related to net share settlement of share-based awards | (326) | (2,955) |
Proceeds from exercise of stock options | 0 | 32 |
Net cash used in financing activities | (25,077) | (29,521) |
Effect of exchange rate changes on cash and cash equivalents | 944 | (499) |
Net change in cash and cash equivalents | 7,100 | (11,172) |
Cash and cash equivalents at beginning of period | 15,016 | 25,544 |
Cash and cash equivalents at end of period | 22,116 | 14,372 |
Supplemental disclosure of cash paid | ||
Interest | 9,061 | 9,944 |
Income taxes, net of refunds | 1,633 | 4,011 |
Noncash investing and financing | ||
Equipment acquired through finance lease obligations | $ 1,607 | $ 5,536 |
Description of Business_and Bas
Description of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [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” multinational provider of integrated technology-enabled asset protection solutions helping to maximize the safety and operational uptime for civilization’s most critical industrial and civil assets. Backed by an innovative, data-driven asset protection portfolio, proprietary technologies, and decades-long legacy of industry leadership, the Company helps clients in the oil and gas, aerospace and defense, power generation, infrastructure, and manufacturing industries towards achieving and maintaining operational excellence. By supporting these organizations that help fuel our vehicles and power our society; inspecting components that are trusted for commercial, defense, and space craft; and building real-time monitoring equipment to enable safe travel across bridges, the Company helps the world at large. The Company enhances value for its clients by integrating asset protection throughout supply chains and centralizing integrity data through a suite of Industrial IoT-connected digital software and monitoring solutions. The company’s core capabilities also include non-destructive testing (“NDT”) field inspections enhanced by advanced robotics, laboratory quality control and assurance testing, sensing technologies and NDT equipment, asset and mechanical integrity engineering services, and light mechanical maintenance and access services. The Company serves a global customer base of companies with asset-intensive infrastructure, including companies in the oil and gas, commercial aerospace and defense, fossil and nuclear power, alternative and renewable energy, public infrastructure, chemicals, transportation, primary metals and metalworking, pharmaceutical/biotechnology and food processing industries and research and engineering institutions. Recent Developments In March 2020, the World Health Organization declared the outbreak of the COVID-19 coronavirus (COVID-19) as a pandemic, which continues to infect the population throughout the United States and most other parts of the world. The COVID-19 pandemic has caused significant volatility in domestic and international markets. There is on-going uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies. In addition, oil prices have dropped significantly, and airline traffic has experienced a significant decline. In response to various factors surrounding the COVID-19 pandemic and, in the case of the oil and gas market, other macroeconomic events, companies within the oil and gas and aerospace industries (including our customers) have reduced spending and/or slowed down (or temporarily ceased) production. This, in turn, resulted in decreases in awards of new contracts or adjustments, reductions, suspensions or cancellations of existing contracts. The COVID-19 pandemic, significant volatility in oil prices and decreased traffic in the aerospace industry have adversely affected the Company's workforce and operations, as well as the operations of the Company's customers, suppliers and contractors. These negative factors have also resulted in significant volatility and uncertainty in the markets in which the Company operates. To successfully navigate through this unprecedented period, the Company continues to focus on the following key priorities: • Ensuring the health and safety of its employees and those of its customers and suppliers; • Maintaining business continuity and financial strength and stability; and • Serving its customers as they provide essential products and services to the world. While the Company cannot fully assess the impact that the factors discussed above will have on its operations at this time, there are certain impacts that the Company has identified: • The financial market volatility that resulted from COVID-19 and the volatility in oil prices required the Company to reassess the goodwill it had recorded related to various prior acquisitions under the guidance of ASC 350 during the first quarter of 2020. The Company determined that the fair values of various reporting units were less than their carrying values (including goodwill). As a result, the Company recorded an impairment charge related to goodwill of approximately $77.1 million during the three months ended March 31, 2020. See Note 8- Goodwill . • These same events required the Company to reassess the tangible and intangible assets recorded under the guidance of ASC 360 during the first quarter of 2020. The Company determined that the fair values of certain asset groups were less than their carrying values (excluding goodwill). As a result, the Company recorded impairment charges related to intangible assets of approximately $28.8 million and a right-of-use asset of approximately $0.2 million during the three months ended March 31, 2020. See Note 9- Intangible Assets and Note 13- Leases . To respond to the economic downturn resulting from the factors discussed above, in March 2020 the Company initiated a cost reduction and efficiency program. As part of this program, named executive officers of the Company took voluntarily temporary salary reductions ranging from 25% to 45% of their base salary. In addition, the Company instituted a reduction for certain other salaried employees, at lower percentages, and suspended the Company's voluntary match under the Company sponsored savings plans for its U.S. and Canadian employees. These reductions became effective at the beginning of the second quarter of 2020 and, except for the salary reductions for certain lower salaried employees, continued through the end of the third quarter of 2020. In addition, the Company’s non-employee directors voluntarily agreed to a $3,750 reduction in their second and third quarter 2020 director's fee payments. Beginning in the fourth quarter of 2020, all salary and director fee reductions were removed and pay levels were returned to first quarter levels, though certain other cost reduction measures have remained in place. The Company is currently unable to predict with certainty the overall impact that the factors discussed above may have on its business, results of operations or liquidity or in other ways which the Company cannot yet determine. The Company will continue to monitor market conditions and respond accordingly. Basis of Presentation The Unaudited Condensed Consolidated Financial Statements contained in this report have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP"). In the opinion of management, the Unaudited 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 years ending December 31, 2020 and December 31, 2019. The Company follows guidance on the consolidation of variable interest entities (VIEs) that requires companies to utilize a qualitative approach to determine whether it is the primary beneficiary of a VIE. The process for identifying the primary beneficiary of a VIE requires consideration of the factors that indicate a party has the power to direct the activities that most significantly impact the VIE’s economic performance, including powers granted to the VIE’s program manager, powers contained in the VIE governing board and, to a certain extent, a company’s economic interest in the VIE. The Company analyzes its joint ventures and classifies them as either: • a VIE that must be consolidated because the Company is the primary beneficiary, or the joint venture is not a VIE and the Company holds the majority voting interest with no significant participative rights available to the other partners; or • a VIE that does not require consolidation and is treated as an equity method investment because the Company is not the primary beneficiary or the joint venture is not a VIE and the Company does not hold the majority voting interest. As part of the above analysis, if it is determined that the Company has the power to direct the activities that most significantly impact the joint venture’s economic performance, the Company considers whether or not it has the obligation to absorb losses or rights to receive benefits of the VIE that could potentially be significant to the VIE. The Company became the primary beneficiary in July 2020 of a VIE in which the Company has a 49% interest in a limited partnership, and a 49% shareholder in the corporate general partner of the limited partnership. The Company consolidated the financial statements of the VIE with the financial statements of the Company. As of and the for the three months ended September 30, 2020, the VIE had no assets nor did it have any revenue. The Company is the primary sub-contractor of the VIE. 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 2019 Annual Report on Form 10-K ("2019 Annual Report"). Principles of Consolidation The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of Mistras Group, Inc. as well as its wholly-owned subsidiaries, majority-owned subsidiaries and consolidated VIE. For subsidiaries in which the Company’s ownership interest is less than 100%, the non-controlling interests are reported in stockholders’ equity in the accompanying Condensed Consolidated Balance Sheets. The non-controlling interests in net results, net of tax, is classified separately in the accompanying Unaudited Condensed Consolidated Statements of Income (Loss). All significant intercompany accounts and transactions have been eliminated in consolidation. Customers For each of the nine months ended September 30, 2020 and 2019, no customer represented 10% or more of the Company's revenue. Significant Accounting Policies The Company’s significant accounting policies are disclosed in Note 1– Summary of Significant Accounting Policies and Practices in the 2019 Annual Report. On an ongoing basis, the Company evaluates its estimates and assumptions, including among other things, those related to revenue recognition, long-lived assets, goodwill and acquisitions. Since the date of the 2019 Annual Report, there have been no material changes to the Company's significant accounting policies. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided if it is more likely than not that some or all of a deferred income tax asset will not be realized. Financial accounting standards prescribe a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. These standards also provide guidance on de-recognition, measurement, and classification of amounts relating to uncertain tax positions, accounting for and disclosure of interest and penalties, accounting in interim periods and disclosures required. Interest and penalties related to unrecognized tax positions are recognized as incurred within “provision for income taxes” in the Consolidated Statements of Income (Loss). ASC 740-270, Income Taxes-Interim Reporting, requires the Company to use an estimated annual effective tax rate (EAETR) for calculating its tax provision for interim periods. At each interim period, the Company is required, with certain exceptions and limitations, to estimate its forecasted worldwide EAETR, which is applied to the Company's year-to-date consolidated ordinary income or loss resulting in the year-to-date income tax provision before considering items not included in ordinary income or loss. The tax effects of events or transactions not considered to represent ordinary income or loss are accounted for discretely in the interim period and are not included in the determination of the EAETR. In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. The CARES Act, among other things, includes tax provisions relating to deferment of employer’s social security payments, net operating loss utilization and carryback periods, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property (QIP). The ultimate impact of the CARES Act may differ from the estimated impact the Company recorded during this interim period due to changes in interpretations and guidance that may be issued and actions the Company may take in response to the CARES Act. The Company will continue to assess the impact that various provisions of the CARES Act, and how they are interpreted and effected, will have on its business. The Company continues to evaluate its deferred tax assets each period to determine if a valuation allowance is required based on whether it is more likely than not that some portion of these deferred tax assets will not be realized. As of September 30, 2020, management concluded that it is more likely than not that a substantial portion of the Company's deferred tax assets will be realized. As part of the Company's analysis, it considered both positive and negative factors that impact profitability and whether those factors would lead to a change in the estimate of the Company's deferred tax assets that may be realized in the future. The Company’s effective income tax rate was approximately 26% and 61% for the three months ended September 30, 2020 and 2019, respectively. The Company’s effective income tax rate was approximately 14% and 55% for the nine months ended September 30, 2020 and 2019, respectively. The effective income tax rate for the third quarter of 2020 was greater than the statutory rate due to the unfavorable impact of taxes in other jurisdictions and other permanent book to tax differences offset by the favorable impact of the CARES act. The effective income tax rate for the first nine-months of 2020 was lower than the statutory rate primarily due to impairments for which the Company will not realize income tax benefits, partially offset by income tax benefits of the CARES Act. The CARES Act provides a five-year carryback of net operating losses generated in years 2018 through 2020. As the statutory federal income tax rate applicable to certain years within the carryback period is 35%, carryback to those years of the Company's estimated 2020 annual federal tax loss provides a tax benefit in excess of the current federal statutory rate of 21%, resulting in an increased income tax benefit. The Company projects that the income tax effects of the CARES Act will result in additional income tax benefit recognized throughout the 2020 tax year and a cash refund in 2021 of taxes paid in prior years. The effective income tax rate for the three and nine months ended September 30, 2019 was higher than the statutory rate due to the impact of discrete items, the global intangible low-taxed income (GILTI), executive compensation, other provisions resulting from the December 22, 2017 passage of the Tax Cuts and Jobs Act and foreign tax rates different than statutory rates in the U.S. Recent Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities related to outside basis differences. The standard is effective for interim and annual periods beginning January 1, 2021, with certain amendments applied prospectively and others requiring retrospective application. Early adoption is permitted, with any adjustments reflected as of the beginning of the fiscal year of adoption. If early adoption is elected, all changes as a result of the standard must be adopted in the same period. The Company is currently evaluating the impact of this guidance on its consolidated financial position, results of operations, and cash flows. In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The guidance provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of this guidance on its consolidated financial position, results of operations, and cash flows. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue The Company derives the majority of its revenue by providing services on a time and material basis, which are generally short-term in nature. The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers . Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of the Company's contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and is, therefore, not distinct. The Company provides highly integrated and bundled inspection services to its customers. Some of the Company's contracts have multiple performance obligations, most commonly due to the contract providing both goods and services. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using its best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is a relative selling price based on price lists. Contract modifications are not routine in the performance of the Company contracts. Generally, when contracts are modified, the modification is to account for changes in scope to the goods and services that are provided. In most instances, contract modifications are for goods or services that are distinct, and, therefore, are accounted for as a separate contract. The Company's performance obligations are satisfied over time as work progresses or at a point in time. The majority of the Company's revenue recognized over time as work progresses is related to its service deliverables, which includes providing testing, inspection and mechanical services to the Company's customers. Revenue is recognized over time based on time and material incurred to date which best portrays the transfer of control to the customer. The Company also utilizes an available practical expedient that provides for revenue to be recognized in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date. Fixed fee arrangements are determined based on expected labor, material, and overhead to be consumed on fulfillment of such services. Revenue is recognized on a cost-to-cost method tracked on an input basis. The majority of the Company's revenue recognized at a point in time is related to product sales when the customer obtains control of the asset, which is generally upon shipment to the customer. Contract costs include labor, material and overhead. The Company expects any significant remaining performance obligations to be satisfied within one year. Contract Estimates The majority of the Company's revenue are short-term in nature. The Company has many master service agreements (MSAs) that specify an overall framework and contract terms when the Company and customers agree upon services or products to be provided. The actual contracting to provide services or furnish products is triggered by a work order, purchase order, or some similar document issued pursuant to a MSA which sets forth the scope of services and/or identifies the products to be provided. From time-to-time, the Company may enter into long-term contracts, which can range from several months to several years. Revenue on such long-term contracts is recognized as work is performed based on total costs incurred to date in relation to the total estimated costs for the performance of the contract at completion. This includes contract estimates of costs to be incurred for the performance of the contract. Cost estimation is based upon the professional knowledge and experience of the Company's project managers, engineers and financial professionals. Factors that are considered in estimating the work to be completed include the availability of materials, the effect of any delays in the Company's project performance and the recoverability of any claims. Whenever revisions of estimates, contract costs and/or contract values indicate that the contract costs will exceed estimated revenue, thus creating a loss, a provision for the total estimated loss is recorded in that period. Revenue by Category The following series of tables present the Company's disaggregated revenue: Revenue by industry was as follows: Three Months Ended September 30, 2020 Services International Products Corp/Elim Total Oil & Gas $ 72,195 $ 9,749 $ 51 $ — $ 81,995 Aerospace & Defense 10,904 3,676 72 — 14,652 Industrials 12,209 5,261 442 — 17,912 Power generation & Transmission 9,053 2,054 390 — 11,497 Other Process Industries 6,023 2,373 85 — 8,481 Infrastructure, Research & Engineering 5,309 2,245 1,223 — 8,777 Other 4,028 1,119 1,669 (2,236) 4,580 Total $ 119,721 $ 26,477 $ 3,932 $ (2,236) $ 147,894 Three Months Ended September 30, 2019 Services International Products Corp/Elim Total Oil & Gas $ 100,927 $ 11,561 $ 71 $ — $ 112,559 Aerospace & Defense 12,420 9,626 438 — 22,484 Industrials 15,612 5,453 506 — 21,571 Power generation & Transmission 7,215 3,462 461 — 11,138 Other Process Industries 6,942 2,674 304 — 9,920 Infrastructure, Research & Engineering 4,205 1,964 2,964 — 9,133 Other 5,251 2,310 777 (2,951) 5,387 Total $ 152,572 $ 37,050 $ 5,521 $ (2,951) $ 192,192 Nine Months Ended September 30, 2020 Services International Products Corp/Elim Total Oil & Gas $ 214,773 $ 26,192 $ 214 $ — $ 241,179 Aerospace & Defense 39,804 14,686 370 — 54,860 Industrials 35,374 13,997 1,349 — 50,720 Power generation & Transmission 21,800 4,958 1,888 — 28,646 Other Process Industries 17,026 7,103 162 — 24,291 Infrastructure, Research & Engineering 12,820 6,726 3,683 — 23,229 Other 7,674 3,225 3,080 (5,110) 8,869 Total $ 349,271 $ 76,887 $ 10,746 $ (5,110) $ 431,794 Nine Months Ended September 30, 2019 Services International Products Corp/Elim Total Oil & Gas $ 301,696 $ 33,033 $ 551 $ — $ 335,280 Aerospace & Defense 38,725 31,783 1,060 — 71,568 Industrials 51,373 15,987 1,585 — 68,945 Power generation & Transmission 21,829 7,383 2,328 — 31,540 Other Process Industries 19,644 7,420 376 — 27,440 Infrastructure, Research & Engineering 9,601 7,214 4,869 — 21,684 Other 11,211 6,482 2,453 (7,008) 13,138 Total $ 454,079 $ 109,302 $ 13,222 $ (7,008) $ 569,595 Revenue per key geographic location was as follows: Three Months Ended September 30, 2020 Services International Products Corp/Elim Total United States $ 100,586 $ 193 $ 1,538 $ (912) $ 101,405 Other Americas 18,767 1,100 75 (124) 19,818 Europe 350 24,790 1,002 (1,088) 25,054 Asia-Pacific 18 394 1,317 (112) 1,617 Total $ 119,721 $ 26,477 $ 3,932 $ (2,236) $ 147,894 Three Months Ended September 30, 2019 Services International Products Corp/Elim Total United States 123,585 $ 128 $ 3,780 $ (1,084) $ 126,409 Other Americas 26,981 1,842 72 32 28,927 Europe 1,157 31,817 513 (1,844) 31,643 Asia-Pacific 849 3,263 1,156 (55) 5,213 Total $ 152,572 $ 37,050 $ 5,521 $ (2,951) $ 192,192 Nine Months Ended September 30, 2020 Services International Products Corp/Elim Total United States $ 298,372 $ 507 $ 5,150 $ (2,433) $ 301,596 Other Americas 49,548 3,564 425 (370) 53,167 Europe 721 71,056 1,930 (2,129) 71,578 Asia-Pacific 630 1,760 3,241 (178) 5,453 Total $ 349,271 $ 76,887 $ 10,746 $ (5,110) $ 431,794 Nine Months Ended September 30, 2019 Services International Products Corp/Elim Total United States $ 368,600 $ 461 $ 8,727 $ (3,638) $ 374,150 Other Americas 82,494 5,757 209 (232) 88,228 Europe 1,855 97,098 1,370 (3,079) 97,244 Asia-Pacific 1,130 5,986 2,916 (59) 9,973 Total $ 454,079 $ 109,302 $ 13,222 $ (7,008) $ 569,595 Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Condensed Consolidated Balance Sheets. Amounts are generally billed as work progresses in accordance with agreed-upon contractual terms, generally at periodic intervals (e.g., weekly, bi-weekly or monthly). Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, the Company sometimes receives advances or deposits from its customers before revenue is recognized, resulting in contract liabilities. These assets and liabilities are aggregated on an individual contract basis and reported on the Condensed Consolidated Balance Sheets at the end of each reporting period within accounts receivable, net or accrued expenses and other current liabilities. Revenue recognized during the nine months ended September 30, 2020 and 2019 that was included in the contract liability balance at the beginning of such year was $4.4 million and $3.4 million, respectively. Changes in the contract asset and liability balances during these periods were not materially impacted by any other factors. The Company has elected to utilize a practical expedient to expense incremental costs incurred related to obtaining a contract. The Company’s expenses are expected to be amortized over a period less than one year. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | Share-Based Compensation The Company has share-based incentive awards outstanding to its eligible employees and non-employee directors under two equity incentive plans: (i) the 2009 Long-Term Incentive Plan (the "2009 Plan") and (ii) the 2016 Long-Term Incentive Plan (the "2016 Plan"). No further awards may be granted under the 2009 Plan, although awards granted under the 2009 Plan remain outstanding in accordance with their terms. Awards granted under the 2016 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. At the annual shareholders meeting on May 19, 2020, the Company’s shareholders approved an amendment to increase the total number of shares that may be issued under the 2016 Plan by 2 million, for a total of 3.7 million shares that may be issued under the 2016 Plan. Stock Options For the three and nine months ended September 30, 2020 and 2019, the Company did not recognize any share-based compensation expense related to stock option awards, as all outstanding stock options awards were then already fully vested. No unrecognized compensation costs remained related to stock option awards as of September 30, 2020. The following table sets forth a summary of the stock option activity, weighted-average exercise prices and options outstanding as of September 30, 2020 and September 30, 2019: Nine months ended September 30, 2020 2019 Common Stock Options Weighted Average Exercise Price Common Stock Options Weighted Average Exercise Price Outstanding at beginning of period: 5 $ 22.35 2,105 $ 13.47 Granted — $ — — $ — Exercised — $ — (2,093) $ 13.45 Expired or forfeited — $ — (7) $ 10.00 Outstanding at end of period: 5 $ 22.35 5 $ 22.35 Restricted Stock Unit Awards For the three months ended September 30, 2020 and September 30, 2019, the Company recognized share-based compensation expense related to restricted stock unit awards of $1.1 million and $1.0 million, respectively. For the nine months ended September 30, 2020 and September 30, 2019, the Company recognized share-based compensation expense related to restricted stock unit awards of $3.2 million and $3.0 million, respectively. As of September 30, 2020, there was $5.5 million of unrecognized compensation costs, net of estimated forfeitures, related to restricted stock unit awards, which is expected to be recognized over a remaining weighted-average period of 2.4 years. Upon vesting, restricted stock units are generally net share-settled to cover the required withholding tax and the remaining amount is converted into an equivalent number of shares of common stock. A summary of the vesting activity of restricted stock unit awards, with the respective fair value of the awards, is as follows: Nine months ended September 30, 2020 2019 Restricted stock awards vested 183 148 Fair value of awards vested $ 719 $ 2,168 A summary of the fully-vested common stock the Company issued to its six non-employee directors, in connection with its non-employee director compensation plan, is as follows: Nine months ended September 30, 2020 2019 Awards issued 68 30 Grant date fair value of awards issued $ 326 $ 450 A summary of the Company's outstanding, non-vested restricted share units is as follows: Nine months ended September 30, 2020 2019 Units Weighted Units Weighted Outstanding at beginning of period: 559 $ 16.92 443 $ 20.55 Granted 557 $ 3.77 334 $ 14.04 Released (183) $ 18.44 (148) $ 20.17 Forfeited (32) $ 9.87 (36) $ 18.38 Outstanding at end of period: 901 $ 8.72 593 $ 17.08 Performance Restricted Stock Units The Company maintains Performance Restricted Stock Units (PRSUs) that have been granted to select executives and senior officers whose ultimate payout is based on the Company’s performance over a one-year period based on specific metrics approved by the Compensation Committee of the Board of Directors of the Company. For 2019, three metrics, as defined: (1) Operating Income, (2) Adjusted EBITDAS (defined as net income attributable to MISTRAS Group, Inc. plus: interest expense, provision for income taxes, depreciation and amortization, share-based compensation expense and certain acquisition related costs (including transaction due diligence costs and adjustments to the fair value of contingent consideration), foreign exchange (gain) loss and, if applicable, certain special items which are noted) and (3) Revenue. There also is a discretionary portion of the PRSUs based on individual performance, granted at the discretion of the Compensation Committee (Discretionary PRSUs). PRSUs and Discretionary PRSUs generally vest ratably on each of the first four anniversary dates upon completion of the performance period, for a total requisite service period of up to five years and have no dividend rights. For 2020, the Compensation Committee changed the criteria for the PRSUs to four metrics, with no discretionary portion. Revenue and Adjusted EBITDAS are being retained, and two additional metrics, free cash flow as a percentage of revenue and return on average book equity, will replace Operating Income. These two newly-added metrics are relative metrics, the performance of which are based upon how the Company performs relative to a peer group. PRSUs are equity-classified and compensation costs are initially measured using the fair value of the underlying stock at the date of grant, assuming that the target performance conditions will be achieved. Compensation costs related to the PRSUs are subsequently adjusted for changes in the expected outcomes of the performance conditions. Discretionary PRSUs are liability-classified and adjusted to fair value (with a corresponding adjustment to compensation expense) based upon the targeted number of shares to be awarded and the fair value of the underlying stock each reporting period until approved by the Compensation Committee, at which point they are equity-classified. A summary of the Company's PRSU activity is as follows: Nine months ended September 30, 2020 2019 Units Weighted Units Weighted Outstanding at beginning of period: 260 $ 16.77 277 $ 17.80 Granted 292 $ 3.68 190 $ 13.63 Performance condition adjustments (145) $ 3.54 (36) $ 14.06 Released (78) $ 15.43 (77) $ 15.86 Forfeited — $ — — $ — Outstanding at end of period: 329 $ 11.09 354 $ 16.45 During the nine months ended September 30, 2020 and September 30, 2019, the Compensation Committee approved the final calculation of the award metrics for calendar year 2019 and calendar year 2018, respectively. As a result, the calendar year 2019 PRSUs increased by approximately 1,000 units and the calendar year 2018 PRSUs decreased by approximately 3,000 units. Calendar year 2020 PRSUs decreased by 146,000 units during the nine months ended September 30, 2020 based on forecasted results for calendar year 2020. Calendar year 2019 PRSUs decreased approximately 33,000 units during the nine months ended September 30, 2019 based on forecasted results for calendar year 2019. For the three months ended September 30, 2020 and September 30, 2019, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $0.2 million and $0.5 million, respectively. For the nine months ended September 30, 2020 and September 30, 2019, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $0.8 million and $1.2 million, respectively. At September 30, 2020, there was $1.3 million of total unrecognized compensation costs related to approximately 329,000 non-vested PRSUs, which is expected to be recognized over a remaining weighted-average period of 1.8 years. |
Earnings (loss) per Share
Earnings (loss) per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings (loss) per Share | Earnings (loss) per Share Basic earnings (loss) 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) 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 September 30, Nine months ended September 30, 2020 2019 2020 2019 Basic earnings (loss) per share: Numerator: Net income (loss) attributable to Mistras Group, Inc. $ 1,523 $ 3,093 $ (99,642) $ 5,231 Denominator: Weighted-average common shares outstanding 29,177 28,800 29,086 28,678 Basic earnings (loss) per share $ 0.05 $ 0.11 $ (3.43) $ 0.18 Diluted earnings (loss) per share: Numerator: Net income (loss) attributable to Mistras Group, Inc. $ 1,523 $ 3,093 $ (99,642) $ 5,231 Denominator: Weighted-average common shares outstanding 29,177 28,800 29,086 28,678 Dilutive effect of stock options outstanding — 129 — 147 Dilutive effect of restricted stock units outstanding (1) 134 227 — 197 29,311 29,156 29,086 29,022 Diluted earnings (loss) per share $ 0.05 $ 0.11 $ (3.43) $ 0.18 _______________ (1) For the nine months ended September 30, 2020, 213 thousand shares related to restricted stock were excluded from the calculation of diluted EPS due to the net loss for the period. |
Acquisitions and Dispositions
Acquisitions and Dispositions | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisitions and Dispositions | Acquisitions and Dispositions Acquisitions The Company did not complete any acquisitions during the nine months ended September 30, 2020. During September 2019, the Company completed one acquisition that provides pipeline integrity management software and services to energy transportation companies. The Company acquired all the equity interest of the acquiree in exchange for aggregate consideration of $4.4 million in cash, contingent consideration of up to $4.3 million to be earned based upon the acquired business achieving specific performance metrics over the initial three years of operations from the acquisition date and working capital adjustments. The goodwill recorded is primarily attributable to expected synergies and is generally deductible for tax purposes. The Company accounted for this transaction in accordance with the acquisition method of accounting for business combinations. The following table summarizes the final fair value of the assets acquired and liabilities assumed, the Company's allocation of purchase price and any subsequent adjustments made for the September 2019 acquisition: Cash paid $ 4,380 Working capital adjustments (152) Fair value of contingent consideration 1,342 Total consideration $ 5,570 Current net assets $ 142 Other assets 34 Property, plant and equipment 65 Intangibles 3,594 Goodwill 1,735 Net assets acquired $ 5,570 Acquisition-Related Expense In the course of its acquisition activities, the Company incurs costs in connection with due diligence, such as professional fees, and other expenses. Additionally, the Company adjusts the fair value of acquisition-related contingent consideration liabilities on a quarterly basis. These amounts are reported as Acquisition-related expense, net on the Unaudited Condensed Consolidated Statements of Income (Loss) and were as follows for the three and nine months ended September 30, 2020 and 2019: Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Due diligence, professional fees and other transaction costs $ — $ 93 $ — $ 433 Adjustments to fair value of contingent consideration liabilities 709 (125) 186 537 Acquisition-related expense, net $ 709 $ (32) $ 186 $ 970 The Company's contingent consideration liabilities are included in Accrued expenses and other current liabilities and Other long-term liabilities on the Condensed Consolidated Balance Sheets. |
Accounts Receivable, net
Accounts Receivable, net | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable consisted of the following: September 30, 2020 December 31, 2019 Trade accounts receivable $ 122,515 $ 144,282 Allowance for doubtful accounts (8,425) (8,285) Accounts receivable, net $ 114,090 $ 135,997 The Company had $20.5 million and $22.2 million of unbilled revenue accrued as of September 30, 2020 and December 31, 2019, respectively. These amounts are included in the trade accounts receivable balances above. Unbilled revenue is generally billed in the subsequent quarter to their revenue recognition. The Company was contracted to perform inspections of welds on various pipeline projects in Texas for a customer. As of September 30, 2020, approximately $1.4 million of past due receivables were outstanding from this customer. The Company received notice from the customer in December 2019, alleging that the work performed was not in compliance with the contract. The Company filed a lawsuit to recover the $1.4 million and other amounts due to the Company and the customer filed a counterclaim, alleging breach of contract and seeking its damages. Accordingly, the Company recorded a reserve of $0.3 million during the three months ended September 30, 2019 and $1.1 million during the three months ended December 31, 2019 for these past due receivables. The status of this situation has not changed during 2020. See Note 14- Commitments and Contingencies for additional details. In the fourth quarter of 2018, the Company recorded a reserve of $0.7 million for a renewable energy industry customer, based in part on the available information about the financial difficulties of the customer. During the first quarter of 2019, the Company recorded an additional charge of $5.7 million to fully reserve for the amount of the exposure related to this customer. This customer filed for a voluntary insolvency proceeding on April 9, 2019. During the second quarter of 2019, the Company reversed $1.0 million of this reserve based on additional information obtained during the quarter. The status of the dispute has not changed since the second quarter of 2019. During 2019, the Company sold to an unaffiliated third party, without recourse, its remaining outstanding receivables owed from a customer which filed for bankruptcy, and for which the Company had initially recorded a charge during the second quarter of 2017. During the first quarter of 2019, the Company recorded a recovery of $0.2 million and during the second quarter of 2019, the Company recorded a recovery $1.7 million, related to a bad debt provision for the receivables due from this customer. This matter is considered fully resolved. |
Property, Plant and Equipment,
Property, Plant and Equipment, net | 9 Months Ended |
Sep. 30, 2020 | |
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) September 30, 2020 December 31, 2019 Land $ 2,694 $ 2,672 Buildings and improvements 30-40 25,114 24,537 Office furniture and equipment 5-8 19,924 17,227 Machinery and equipment 5-7 231,890 225,974 279,622 270,410 Accumulated depreciation and amortization (187,851) (171,803) Property, plant and equipment, net $ 91,771 $ 98,607 Depreciation and amortization expense for the three months ended September 30, 2020 and 2019 was approximately $6.2 million and $5.8 million, respectively. |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill Changes in the carrying amount of goodwill by segment is shown below: Services International Products and Systems Total Balance at December 31, 2019 $ 247,215 $ 35,195 $ — $ 282,410 Goodwill acquired during the period — — — — Impairment charges (57,227) (19,862) — (77,089) Adjustments to preliminary purchase price allocations 200 — — 200 Foreign currency translation (3,735) (163) — (3,898) Balance at September 30, 2020 $ 186,453 $ 15,170 $ — $ 201,623 The Company reviews goodwill for impairment on a reporting unit basis on October 1 of each year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. During the first quarter of 2020, the Company’s market capitalization declined significantly compared to the fourth quarter of 2019. Over the same period, the equity value of the Company’s peer group, and the overall U.S. stock market also declined significantly amid market volatility. In addition, oil prices had dropped significantly. These declines were driven in large part by the uncertainty surrounding the COVID-19 pandemic and other macroeconomic events such as the geopolitical tensions between OPEC and Russia. Based on these factors, the Company concluded that multiple triggering events occurred and, accordingly, an interim quantitative goodwill impairment test was performed as of the testing date for each reporting unit as of March 31, 2020 (“testing date”). During the first quarter of 2020, the Company also performed an analysis to determine any impairment of long-lived assets (see Note 9- Intangible Assets ) based on the triggering events noted above. In performing the interim quantitative goodwill impairment test and consistent with prior practice, the Company determined the fair value of each of the reporting units using a combination of the income approach and the market approach by assessing each of these valuation methodologies based upon availability and relevance of comparable company data and determining the appropriate weighting. Under the income approach, the fair value for each of the reporting units was determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. The Company used internal forecasts, updated for recent events, to estimate future cash flows with cash flows beyond the specific operating plans estimated using a terminal value calculation, which incorporates historical and forecasted trends, including an estimate of long-term future growth rates, based on the Company’s most recent views of the long-term outlook for each reporting unit. The internal forecasts include assumptions about future market recovery, including the expected demand for the Company’s goods and services. Due to the inherent uncertainties involved in making estimates and assumptions, actual results may differ from those assumed in the forecasts. The Company derived the discount rates using a capital asset pricing model and analyzing published rates for industries relevant to the reporting units to estimate the cost of equity financing. The Company used discount rates that are commensurate with the risks and uncertainties inherent in the respective businesses and in the internally developed forecasts, updated for recent events. The market approach valuations were derived from metrics of publicly traded companies or historically completed transactions of comparable businesses. The selection of comparable businesses was based on the markets in which the reporting units operate considering risk profiles, size, geography, and diversity of products and services. Based upon the results of the interim quantitative goodwill impairment test during the first quarter of 2020, the Company recorded an aggregate impairment charge of $77.1 million, which included $57.2 million in the services reporting unit within the Services segment, and $19.3 million in the European reporting unit and $0.6 million in the Brazilian reporting unit, both within the International segment. The impairment was calculated based on the difference between the estimated fair value and the carrying value of the reporting units and are included in Impairment charges on the Unaudited Condensed Consolidated Statements of Income (Loss) for the nine months ended September 30, 2020. Subsequent to March 31, 2020 through September 30, 2020, the Company did not identify any changes in circumstances that would indicate the carrying value of goodwill may not be recoverable. Significant adverse changes in future periods could negatively affect the Company's key assumptions and may result in future goodwill impairment charges which could be material. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
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: September 30, 2020 December 31, 2019 Useful Life Gross Amount Accumulated Amortization Impairment Net Carrying Amount Gross Amount Accumulated Amortization Net Carrying Amount Customer relationships 5-18 $ 114,174 $ (72,796) $ (2,206) $ 39,172 $ 113,861 $ (67,853) $ 46,008 Software/Technology 3-15 75,739 (22,323) (25,874) 27,542 77,914 (18,756) 59,158 Covenants not to compete 2-5 12,735 (11,990) (212) 533 12,795 (11,630) 1,165 Other 2-12 10,950 (8,306) (502) 2,142 10,813 (7,607) 3,206 Total $ 213,598 $ (115,415) $ (28,794) $ 69,389 $ 215,383 $ (105,846) $ 109,537 As described in Note 8- Goodwill , during the first quarter of 2020, there were negative market indicators that were determined to be triggering events indicating a potential impairment of certain long-lived assets within asset groups in the Services, International, Products and Corporate segments. The asset groups are groupings of assets and liabilities determined at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability testing indicated that certain intangible assets and right of use assets (See Note 13- Leases ) were potentially impaired. For asset groups that required an impairment measurement, similar to the valuations performed to determine the goodwill impairment, the Company used income and market approaches to estimate the fair value of the long-lived assets, which requires significant judgment in evaluation of the useful lives of the assets, economic and industry trends, estimated future cash flows, discount rates, and other factors. The result of the analysis was an aggregate impairment charge of $28.8 million, which included $25.9 million to software/technology, $2.2 million to customer relationships, $0.5 million to other intangibles and $0.2 million to covenants not to compete, all of which are in the Services reporting unit within the Services segment and are included in Impairment charges on the Unaudited Condensed Consolidated Statements of Income (Loss) for the nine months ended September 30, 2020. Amortization expense for the three months ended September 30, 2020 and 2019 was approximately $2.6 million and $3.4 million, respectively. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
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: September 30, 2020 December 31, 2019 Accrued salaries, wages and related employee benefits $ 28,612 $ 30,072 Contingent consideration, current portion 1,971 2,614 Accrued workers’ compensation and health benefits 4,803 4,467 Deferred revenue 5,982 5,860 Pension accrual 2,519 2,519 Right-of-use liability - operating 9,944 10,133 Other accrued expenses 24,584 25,724 Total $ 78,415 $ 81,389 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following: September 30, 2020 December 31, 2019 Senior credit facility $ 135,430 $ 151,773 Senior secured term loan, net of unamortized debt issuance costs of $0.3 million and $0.1 million 90,973 94,919 Other 10,103 8,021 Total debt 236,506 254,713 Less: Current portion (9,889) (6,593) Long-term debt, net of current portion $ 226,617 $ 248,120 Senior Credit Facility The Company has a credit agreement with its banking group ("Credit Agreement") which provides the Company with a revolving line of credit and a $100 million senior secured term loan A facility. Pursuant to the Amendment described below, the revolving line of credit was reduced from $300 million to $175 million. Both the revolving line of credit and the term loan A facility under the Credit Agreement have a maturity date of December 12, 2023. On May 15, 2020, the Company entered into the Third Amendment (the “Amendment”) to the Credit Agreement. The amendment was needed because the Company determined that as a result of the uncertain impact of the COVID-19 pandemic and the significant drop in oil prices, it would not meet the then existing financial covenants in the Credit Agreement for upcoming quarters. Accordingly, the Amendment modified the financial covenants to provide for: i) elimination of the Funded Debt Leverage Ratio (as defined in the Credit Agreement) for the quarters ended June 30 and September 30, 2020 and increased the Funded Debt Leverage ratio to no greater than 5.25 to 1 beginning for the quarter ending December 31, 2020 and decreasing each successive quarter to no greater than 3.50 to 1 for the quarter ended September 30, 2021, and all quarterly periods thereafter; ii) an elimination of the minimum Fixed Charge Coverage Ratio (as defined in the Credit Agreement for the quarters ended June 30, September 30 and December 31, 2020), a decrease to 1.0 to 1 for the quarter ending March 31, 2021 and returning to 1.25 to 1 for the quarter ending June 30, 2021 and thereafter; iii) the addition of a minimum EBITDA covenant requiring $3.44 million for the three months ending June 30, 2020, $24.25 million for the six months ending September 30, 2020, and $38.55 million for the nine months ending December 31, 2020, with no requirement thereafter; and iv) the addition of a minimum Liquidity (as defined in the Amendment) covenant of not less than $20.0 million at all times through September 30, 2020 and ceasing thereafter. In addition, the Amendment set a LIBOR floor of 1.0% applicable to all LIBOR loans, and increased the LIBOR margin range to 1.50% to 4.15%, in addition to certain other modifications of the Credit Agreement. The Amendment also requires that the Company promptly prepay the outstanding amount under the revolving credit facility in an amount equal to the difference between (a) the aggregate sum of cash and cash equivalents of the Company and its subsidiaries held in the United States minus (b) $10.0 million if, for a period of two (2) consecutive business days, (i) the outstanding amount under the revolving credit facility exceeds $75.0 million and (ii) the sum of such cash and cash equivalents exceeds $10.0 million. The Credit Amendment, as amended, provides that the Company may not make any acquisitions prior to June 30, 2021, and thereafter only if the Company's Funded Debt Leverage Ratio is less than 2.50 to 1, and after giving effect to such acquisition, its pro forma Funded Debt Leverage Ratio will not be greater than 3.25 to 1. 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 or repurchase its stock, enter into a new line of business, enter into transactions with affiliates and enter into burdensome agreements. The Company may borrow up to $100 million in non-U.S. Dollar currencies and use up to $20 million of the credit limit for the issuance of letters of credit. As of September 30, 2020, the Company had borrowings of $226.4 million and a total of $4.3 million of letters of credit outstanding under the Credit Agreement. The Company has capitalized costs associated with debt modifications of $1.2 million as of September 30, 2020, which is included in Other Assets on the Condensed Consolidated Balance Sheets. The Amendment reduced the Company's total available loan capacity, amongst other things, and as a result, the Company expensed approximately $0.6 million in capitalized debt issuance costs during the second quarter of 2020, which was included in Selling, general and administrative expenses on the Unaudited Condensed Consolidated Statements of Income (Loss). As of September 30, 2020, the Company was in compliance with the terms of the Credit Agreement, as amended, and will continuously monitor its compliance with the covenants contained in its Credit Agreement. The Company believes that it is probable, based on the amended covenants, that the Company will be able to comply with the financial covenants in the Credit Agreement as modified by the Amendment and that sufficient credit remains available under the Credit Agreement to meet the Company's liquidity needs. However, due to the uncertainties being caused by the COVID-19 pandemic, the significant volatility in oil prices, and volatility in the aerospace production, such matters cannot be predicted with certainty. Other debt The Company's other debt includes local bank financing provided at the local subsidiary level used to support working capital requirements and fund capital expenditures. At September 30, 2020, there was an aggregate of approximately $10.1 million outstanding, payable at various times through 2030. Monthly payments range from $1 thousand to $17 thousand and interest rates range from 0.4% to 3.5%. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
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. Financial instruments measured at fair value on a recurring basis The fair value of contingent consideration liabilities 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. The following table represents the changes in the fair value of Level 3 contingent consideration: Nine months ended September 30, 2020 2019 Beginning balance $ 3,216 $ 2,365 Acquisitions 200 1,081 Payments (1,337) (755) Accretion of liability 33 85 Revaluation 153 452 Foreign currency translation (23) 50 Ending balance $ 2,242 $ 3,278 Financial instruments not measured at fair value on a recurring basis 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 finance 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. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | Leases The Company leases certain office and operating facilities, machinery, equipment, and vehicles. Concurrent with the adoption of ASC 842, the Company recognized a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term for each lease agreement. The Company has elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less and will continue to recognize lease expense for these leases on a straight-line basis over the lease term. The Company has leases with both lease components and non-lease components, such as common area maintenance, utilities, or other repairs and maintenance. For all asset classes, the Company decided to utilize the practical expedient to include both fixed lease components and fixed non-lease components in calculating the ROU asset and lease liability. The Company identified variable lease payments, such as maintenance payments based on actual activities performed or costs incurred, at lease commencement by assessing the nature of the payment provisions, including whether the payments are subject to a minimum charge. Many of the Company's leases include one or more options to renew. When it is reasonably certain that the Company will exercise the option, the Company will include the impact of the option in the lease term for purposes of determining future lease payments. As the Company is unable to determine the discount rate implicit in its lease agreements, the Company uses its incremental borrowing rate on the commencement date to calculate the present value of future payments. The Company’s Condensed Consolidated Balance Sheets includes the following related to operating leases: Leases Classification September 30, 2020 December 31, 2019 Assets ROU assets Other Assets $ 45,497 $ 45,817 Liabilities ROU - current Accrued and other current liabilities $ 9,944 $ 10,133 ROU liability - long-term Other liabilities 36,821 36,750 Total ROU liabilities $ 46,765 $ 46,883 Included within the balance of operating leases is a lease for the Company’s headquarters which is with a related party. The ROU liability for this facility was approximately $4.0 million and $4.5 million as of September 30, 2020 and December 31, 2019, respectively. Total rent payments for this facility were approximately $0.1 million and $0.2 million for the three months ended September 30, 2020 and September 30, 2019, respectively. Total rent payments for this facility were approximately $0.5 million and $0.7 million for the nine months ended September 30, 2020 and September 30, 2019, respectively. An agreement was reached with the related party to reduce rental payments by 20% and defer payments for 90 days for the lease of the Company’s headquarters, starting in June 2020 through December 2020 as part of COVID-19 related vendor concessions. The total ROU assets attributable to finance leases were approximately $16.0 million and $19.2 million as of September 30, 2020 and December 31, 2019, respectively, which is included in Property, plant, and equipment, net on the Condensed Consolidated Balance Sheets. As described in Note 9- Intangible Assets , the Company performed an analysis to determine whether there was any impairment of long-lived assets, which included the ROU assets, within the Services, International, and Products and Systems operating segments as well as Corporate. The result of the analysis was a $0.2 million impairment of a ROU asset in an asset group within the Services segment which is included in Impairment charges on the Condensed Consolidated Statements of Income (Loss) for the nine months ended September 30, 2020. The components of lease costs were as follows: Three months ended September 30, Nine months ended September 30, Classification 2020 2019 2020 2019 Finance lease expense Amortization of ROU assets Depreciation and amortization $ 1,081 $ 1,205 $ 3,495 $ 3,605 Interest on lease liabilities Interest expense 207 194 650 578 Operating lease expense Cost of revenue; Selling, general & administrative expenses 3,341 3,230 9,970 9,453 Short-term lease expense Cost of revenue; Selling, general & administrative expenses 11 12 60 18 Variable lease expense Cost of revenue; Selling, general & administrative expenses (4) 282 441 828 Total $ 4,636 $ 4,923 $ 14,616 $ 14,482 Additional information related to leases was as follows: Nine months ended September 30, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities for finance and operating leases Finance - financing cash flows $ 3,078 $ 3,338 Finance - operating cash flows $ 650 $ 578 Operating - operating cash flows $ 9,819 $ 9,361 ROU assets obtained in the exchange for lease liabilities Finance leases $ 1,607 $ 5,536 Operating leases $ 6,919 $ 12,766 Weighted-average remaining lease term (in years) Finance leases 5.9 6.0 Operating leases 5.9 6.1 Weighted-average discount rate Finance leases 5.8 % 6.2 % Operating leases 5.8 % 6.0 % Maturities of lease liabilities as of September 30, 2020 were as follows: Finance Operating Remainder of 2020 $ 2,034 $ 3,316 2021 4,621 11,889 2022 3,776 9,818 2023 2,897 8,284 2024 1,971 6,578 Thereafter 1,159 16,084 Total 16,458 55,969 Less: Present value discount (1,516) (9,204) Lease liability $ 14,942 $ 46,765 |
Leases | Leases The Company leases certain office and operating facilities, machinery, equipment, and vehicles. Concurrent with the adoption of ASC 842, the Company recognized a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term for each lease agreement. The Company has elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less and will continue to recognize lease expense for these leases on a straight-line basis over the lease term. The Company has leases with both lease components and non-lease components, such as common area maintenance, utilities, or other repairs and maintenance. For all asset classes, the Company decided to utilize the practical expedient to include both fixed lease components and fixed non-lease components in calculating the ROU asset and lease liability. The Company identified variable lease payments, such as maintenance payments based on actual activities performed or costs incurred, at lease commencement by assessing the nature of the payment provisions, including whether the payments are subject to a minimum charge. Many of the Company's leases include one or more options to renew. When it is reasonably certain that the Company will exercise the option, the Company will include the impact of the option in the lease term for purposes of determining future lease payments. As the Company is unable to determine the discount rate implicit in its lease agreements, the Company uses its incremental borrowing rate on the commencement date to calculate the present value of future payments. The Company’s Condensed Consolidated Balance Sheets includes the following related to operating leases: Leases Classification September 30, 2020 December 31, 2019 Assets ROU assets Other Assets $ 45,497 $ 45,817 Liabilities ROU - current Accrued and other current liabilities $ 9,944 $ 10,133 ROU liability - long-term Other liabilities 36,821 36,750 Total ROU liabilities $ 46,765 $ 46,883 Included within the balance of operating leases is a lease for the Company’s headquarters which is with a related party. The ROU liability for this facility was approximately $4.0 million and $4.5 million as of September 30, 2020 and December 31, 2019, respectively. Total rent payments for this facility were approximately $0.1 million and $0.2 million for the three months ended September 30, 2020 and September 30, 2019, respectively. Total rent payments for this facility were approximately $0.5 million and $0.7 million for the nine months ended September 30, 2020 and September 30, 2019, respectively. An agreement was reached with the related party to reduce rental payments by 20% and defer payments for 90 days for the lease of the Company’s headquarters, starting in June 2020 through December 2020 as part of COVID-19 related vendor concessions. The total ROU assets attributable to finance leases were approximately $16.0 million and $19.2 million as of September 30, 2020 and December 31, 2019, respectively, which is included in Property, plant, and equipment, net on the Condensed Consolidated Balance Sheets. As described in Note 9- Intangible Assets , the Company performed an analysis to determine whether there was any impairment of long-lived assets, which included the ROU assets, within the Services, International, and Products and Systems operating segments as well as Corporate. The result of the analysis was a $0.2 million impairment of a ROU asset in an asset group within the Services segment which is included in Impairment charges on the Condensed Consolidated Statements of Income (Loss) for the nine months ended September 30, 2020. The components of lease costs were as follows: Three months ended September 30, Nine months ended September 30, Classification 2020 2019 2020 2019 Finance lease expense Amortization of ROU assets Depreciation and amortization $ 1,081 $ 1,205 $ 3,495 $ 3,605 Interest on lease liabilities Interest expense 207 194 650 578 Operating lease expense Cost of revenue; Selling, general & administrative expenses 3,341 3,230 9,970 9,453 Short-term lease expense Cost of revenue; Selling, general & administrative expenses 11 12 60 18 Variable lease expense Cost of revenue; Selling, general & administrative expenses (4) 282 441 828 Total $ 4,636 $ 4,923 $ 14,616 $ 14,482 Additional information related to leases was as follows: Nine months ended September 30, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities for finance and operating leases Finance - financing cash flows $ 3,078 $ 3,338 Finance - operating cash flows $ 650 $ 578 Operating - operating cash flows $ 9,819 $ 9,361 ROU assets obtained in the exchange for lease liabilities Finance leases $ 1,607 $ 5,536 Operating leases $ 6,919 $ 12,766 Weighted-average remaining lease term (in years) Finance leases 5.9 6.0 Operating leases 5.9 6.1 Weighted-average discount rate Finance leases 5.8 % 6.2 % Operating leases 5.8 % 6.0 % Maturities of lease liabilities as of September 30, 2020 were as follows: Finance Operating Remainder of 2020 $ 2,034 $ 3,316 2021 4,621 11,889 2022 3,776 9,818 2023 2,897 8,284 2024 1,971 6,578 Thereafter 1,159 16,084 Total 16,458 55,969 Less: Present value discount (1,516) (9,204) Lease liability $ 14,942 $ 46,765 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings and Government Investigations The Company is subject to periodic lawsuits, investigations and claims that arise in the ordinary course of business. The Company cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against it. Except possible liabilities that could arise for certain of the matters described below, the Company does not believe that any currently pending legal proceeding to which the Company is a party will have a material adverse effect on its business, results of operations, cash flows or financial condition. The costs of defense and amounts that may be recovered against the Company may be covered by insurance for certain matters. Litigation and Commercial Claims The Company was contracted to perform inspections of welds on various pipeline projects in Texas for a customer. As of September 30, 2020, approximately $1.4 million of past due receivables were outstanding from this customer. The customer provided the Company with notice in December 2019, alleging that the Company’s inspection of 66 welds (out of over 16,000 welds inspected) were not in compliance with the contract, claimed approximately $7.6 million in damages, and requested that the Company pay these damages and any other damages incurred. The Company has filed a lawsuit in the District Court of Bexar County, Texas, 37th Judicial District, in an action captioned Mistras Group, Inc. v. Epic Y-Grade Pipeline LP, to recover the $1.4 million and other amounts due to the Company. The customer filed a counterclaim, alleging breach of contract and seeking recovery of its alleged damages. The Company believes that any successful claim by the customer regarding the Company’s workmanship will be covered by insurance, subject to payment of a deductible. 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 accruals for this matter. The Company recorded a full reserve in the amount of $1.4 million during the second half of 2019 for these past due receivables. See Note 6– Accounts Receivable, net . Pension Related Contingencies The workforce of certain of the Company’s subsidiaries are unionized and the terms of employment for these workers are governed by collective bargaining agreements, or CBAs. Under these CBAs, the Company’s subsidiaries are required to contribute to the national pension funds for the unions representing these employees, which are multi-employer pension plans. The Company was notified that a significant project was awarded to another contractor in January 2018, and as a result, one of the Company’s subsidiaries experienced a significant reduction in the number of its employees covered by one of the CBAs. Under certain circumstances, such a reduction in the number of employees participating in multi-employer pension plans pursuant to this CBA could result in a complete or partial withdrawal liability to these multi-employer pension plans under the Employee Retirement Income Security Act of 1974 ("ERISA"). Management explored options to retain a level of union work that would avoid withdrawal liability to the pension plans but concluded during the third quarter of 2018 that the Company's subsidiaries probably would not obtain sufficient union work to avoid withdrawal liability. Therefore, the Company determined that it is probable that its subsidiary would incur a withdrawal liability related to these multi-employer pension plans. Accordingly, the Company recorded a charge of $5.9 million during 2018 and $0.8 million during 2019 for this potential withdrawal liability. The Company’s subsidiary reached an agreement with one of the pension funds in September 2019 and made a final payment of $0.9 million in complete satisfaction of the withdrawal liability of the subsidiary. Excluding the settlement payment, the Company made monthly payments totaling $3.3 million through the time of the final settlement payment, for total payments of $4.2 million. The balance of the estimated total amount of this potential liability as of September 30, 2020 is approximately $2.5 million. Severance and labor disputes The Company’s German subsidiary provides employees to customers under temporary staff leasing arrangements. In April 2017, the German Labor Lease Act was passed in Germany limiting the duration of temporary workers to eighteen months, or longer as subsequently agreed with by a customer appropriate authority. Since the passing of the German Labor Lease Act, the Company explored selling its staff leasing services and concluded during the third quarter of 2018 that a sale would not be probable. As a result, the Company decided that it would not renew several of these leasing services contracts when they expired beginning in 2019. Due to the limit on the length of service allowed under the German Labor Lease Act, employees are being transitioned off the customer contracts. The German subsidiary has terminated, or will terminate, some these employees, creating a severance obligation to the terminated employees, and has transitioned, or will transition other employees to the Company's other customers. During December 2019, the Company executed an agreement to sell the rights of certain customer contracts for total consideration of approximately $0.1 million, effective January 1, 2020. No other assets or liabilities other than those employee benefits related to employees working on the customer contracts were included in the sale. As of September 30, 2020, the Company has approximately $0.3 million of accrued estimated severance payment obligations, which takes into account the Company's estimate with respect to the employees that have been or will be transitioned to the German subsidiaries' other customers. The $0.3 million of estimated obligations is net of $0.4 million in payments made and $0.9 million in reversals due to employees being transitioned to customer contracts. Acquisition and disposition related contingencies The Company is liable for contingent consideration in connection with certain of its acquisitions. As of September 30, 2020, total potential acquisition-related contingent consideration ranged from zero to approximately $4.3 million and would be payable upon the achievement of specific performance metrics by certain of the acquired companies over the next 2.0 years. During 2018, the Company sold a subsidiary in the Products and Systems segment. As part of the sale, the Company entered into a three-year agreement to purchase products from the buyer, with a cumulative commitment of $2.3 million, of which $1.3 million is remaining as of September 30, 2020. The agreement is based on third-party pricing and the Company's planned purchase requirements over the three-year purchase period to meet the minimum contractual purchases. |
Segment Disclosure
Segment Disclosure | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Disclosure | Segment Disclosure The Company’s three operating segments are: • Services. This segment provides asset protection solutions predominantly in North America, with the largest concentration in the United States, followed by Canada, consisting primarily of NDT, inspection, mechanical and engineering services that are used to evaluate the safety, structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components. PCMS software and pipeline related software and data analysis solutions are included in this segment. • International. This segment offers services, products and systems similar to those of the other segments to select markets within 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. Costs incurred for general corporate services, including finance, legal, and certain other costs 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: (with intercompany transactions eliminated in Corporate and eliminations) Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Revenue Services $ 119,721 $ 152,572 $ 349,271 $ 454,079 International 26,477 37,050 76,887 109,302 Products and Systems 3,932 5,521 10,746 13,222 Corporate and eliminations (2,236) (2,951) (5,110) (7,008) $ 147,894 $ 192,192 $ 431,794 $ 569,595 Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Gross profit Services $ 37,603 $ 43,330 $ 103,780 $ 127,903 International 8,197 11,695 21,612 33,113 Products and Systems 1,628 2,739 3,834 5,803 Corporate and eliminations (44) 5 (40) (105) $ 47,384 $ 57,769 $ 129,186 $ 166,714 Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Income (loss) from operations Services $ 13,599 $ 15,757 $ (57,058) $ 40,715 International (66) 2,921 (22,422) 5,155 Products and Systems (160) 509 (1,936) (1,224) Corporate and eliminations (7,631) (8,408) (24,453) (22,844) $ 5,742 $ 10,779 $ (105,869) $ 21,802 Income (loss) from operations by operating segment includes intercompany transactions, which are eliminated in Corporate and eliminations. Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Depreciation and amortization Services $ 6,315 $ 6,882 $ 19,601 $ 21,360 International 2,216 2,027 6,433 6,158 Products and Systems 248 312 756 901 Corporate and eliminations (17) 50 (31) 121 $ 8,762 $ 9,271 $ 26,759 $ 28,540 September 30, 2020 December 31, 2019 Intangible assets, net Services $ 59,397 $ 98,284 International 8,748 9,814 Products and Systems 1,101 1,181 Corporate and eliminations 143 258 $ 69,389 $ 109,537 September 30, 2020 December 31, 2019 Total assets Services $ 416,532 $ 537,518 International 127,381 153,380 Products and Systems 14,273 16,028 Corporate and eliminations 22,589 12,952 $ 580,775 $ 719,878 Refer to Note 2 –Revenue, for revenue by geographic area for the three and nine months ended September 30, 2020 and September 30, 2019. |
Description of Business_and B_2
Description of Business and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Unaudited Condensed Consolidated Financial Statements contained in this report have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP"). In the opinion of management, the Unaudited 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 years ending December 31, 2020 and December 31, 2019. The Company follows guidance on the consolidation of variable interest entities (VIEs) that requires companies to utilize a qualitative approach to determine whether it is the primary beneficiary of a VIE. The process for identifying the primary beneficiary of a VIE requires consideration of the factors that indicate a party has the power to direct the activities that most significantly impact the VIE’s economic performance, including powers granted to the VIE’s program manager, powers contained in the VIE governing board and, to a certain extent, a company’s economic interest in the VIE. The Company analyzes its joint ventures and classifies them as either: • a VIE that must be consolidated because the Company is the primary beneficiary, or the joint venture is not a VIE and the Company holds the majority voting interest with no significant participative rights available to the other partners; or • a VIE that does not require consolidation and is treated as an equity method investment because the Company is not the primary beneficiary or the joint venture is not a VIE and the Company does not hold the majority voting interest. As part of the above analysis, if it is determined that the Company has the power to direct the activities that most significantly impact the joint venture’s economic performance, the Company considers whether or not it has the obligation to absorb losses or rights to receive benefits of the VIE that could potentially be significant to the VIE. The Company became the primary beneficiary in July 2020 of a VIE in which the Company has a 49% interest in a limited partnership, and a 49% shareholder in the corporate general partner of the limited partnership. The Company consolidated the financial statements of the VIE with the financial statements of the Company. As of and the for the three months ended September 30, 2020, the VIE had no assets nor did it have any revenue. The Company is the primary sub-contractor of the VIE. 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 |
Principles of Consolidation | Principles of Consolidation The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of Mistras Group, Inc. as well as its wholly-owned subsidiaries, majority-owned subsidiaries and consolidated VIE. For subsidiaries in which the Company’s ownership interest is less than 100%, the non-controlling interests are reported in stockholders’ equity in the accompanying Condensed Consolidated Balance Sheets. The non-controlling interests in net results, net of tax, is classified separately in the accompanying Unaudited Condensed Consolidated Statements of Income (Loss). All significant intercompany accounts and transactions have been eliminated in consolidation. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided if it is more likely than not that some or all of a deferred income tax asset will not be realized. Financial accounting standards prescribe a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. These standards also provide guidance on de-recognition, measurement, and classification of amounts relating to uncertain tax positions, accounting for and disclosure of interest and penalties, accounting in interim periods and disclosures required. Interest and penalties related to unrecognized tax positions are recognized as incurred within “provision for income taxes” in the Consolidated Statements of Income (Loss). ASC 740-270, Income Taxes-Interim Reporting, requires the Company to use an estimated annual effective tax rate (EAETR) for calculating its tax provision for interim periods. At each interim period, the Company is required, with certain exceptions and limitations, to estimate its forecasted worldwide EAETR, which is applied to the Company's year-to-date consolidated ordinary income or loss resulting in the year-to-date income tax provision before considering items not included in ordinary income or loss. The tax effects of events or transactions not considered to represent ordinary income or loss are accounted for discretely in the interim period and are not included in the determination of the EAETR. In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. The CARES Act, among other things, includes tax provisions relating to deferment of employer’s social security payments, net operating loss utilization and carryback periods, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property (QIP). The ultimate impact of the CARES Act may differ from the estimated impact the Company recorded during this interim period due to changes in interpretations and guidance that may be issued and actions the Company may take in response to the CARES Act. The Company will continue to assess the impact that various provisions of the CARES Act, and how they are interpreted and effected, will have on its business. The Company continues to evaluate its deferred tax assets each period to determine if a valuation allowance is required based on whether it is more likely than not that some portion of these deferred tax assets will not be realized. As of September 30, 2020, management concluded that it is more likely than not that a substantial portion of the Company's deferred tax assets will |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities related to outside basis differences. The standard is effective for interim and annual periods beginning January 1, 2021, with certain amendments applied prospectively and others requiring retrospective application. Early adoption is permitted, with any adjustments reflected as of the beginning of the fiscal year of adoption. If early adoption is elected, all changes as a result of the standard must be adopted in the same period. The Company is currently evaluating the impact of this guidance on its consolidated financial position, results of operations, and cash flows. In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The guidance provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of this guidance on its consolidated financial position, results of operations, and cash flows. |
Revenue | Revenue The Company derives the majority of its revenue by providing services on a time and material basis, which are generally short-term in nature. The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers . Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of the Company's contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and is, therefore, not distinct. The Company provides highly integrated and bundled inspection services to its customers. Some of the Company's contracts have multiple performance obligations, most commonly due to the contract providing both goods and services. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using its best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is a relative selling price based on price lists. Contract modifications are not routine in the performance of the Company contracts. Generally, when contracts are modified, the modification is to account for changes in scope to the goods and services that are provided. In most instances, contract modifications are for goods or services that are distinct, and, therefore, are accounted for as a separate contract. The Company's performance obligations are satisfied over time as work progresses or at a point in time. The majority of the Company's revenue recognized over time as work progresses is related to its service deliverables, which includes providing testing, inspection and mechanical services to the Company's customers. Revenue is recognized over time based on time and material incurred to date which best portrays the transfer of control to the customer. The Company also utilizes an available practical expedient that provides for revenue to be recognized in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date. Fixed fee arrangements are determined based on expected labor, material, and overhead to be consumed on fulfillment of such services. Revenue is recognized on a cost-to-cost method tracked on an input basis. The majority of the Company's revenue recognized at a point in time is related to product sales when the customer obtains control of the asset, which is generally upon shipment to the customer. Contract costs include labor, material and overhead. The Company expects any significant remaining performance obligations to be satisfied within one year. Contract Estimates The majority of the Company's revenue are short-term in nature. The Company has many master service agreements (MSAs) that specify an overall framework and contract terms when the Company and customers agree upon services or products to be provided. The actual contracting to provide services or furnish products is triggered by a work order, purchase order, or some similar document issued pursuant to a MSA which sets forth the scope of services and/or identifies the products to be provided. From time-to-time, the Company may enter into long-term contracts, which can range from several months to several years. Revenue on such long-term contracts is recognized as work is performed based on total costs incurred to date in relation to the total estimated costs for the performance of the contract at completion. This includes contract estimates of costs to be incurred for the performance of the contract. Cost estimation is based upon the professional knowledge and experience of the Company's project managers, engineers and financial professionals. Factors that are considered in estimating the work to be completed include the availability of materials, the effect of any delays in the Company's project performance and the recoverability of any claims. Whenever revisions of estimates, contract costs and/or contract values indicate that the contract costs will exceed estimated revenue, thus creating a loss, a provision for the total estimated loss is recorded in that period. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Condensed Consolidated Balance Sheets. Amounts are generally billed as work progresses in accordance with agreed-upon contractual terms, generally at periodic intervals (e.g., weekly, bi-weekly or monthly). Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, the Company sometimes receives advances or deposits from its customers before revenue is recognized, resulting in contract liabilities. These assets and liabilities are aggregated on an individual contract basis and reported on the Condensed Consolidated Balance Sheets at the end of each reporting period within accounts receivable, net or accrued expenses and other current liabilities. |
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. Financial instruments measured at fair value on a recurring basis The fair value of contingent consideration liabilities 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. Financial instruments not measured at fair value on a recurring basis 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 finance 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. |
Leases | LeasesThe Company leases certain office and operating facilities, machinery, equipment, and vehicles. Concurrent with the adoption of ASC 842, the Company recognized a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term for each lease agreement. The Company has elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less and will continue to recognize lease expense for these leases on a straight-line basis over the lease term. The Company has leases with both lease components and non-lease components, such as common area maintenance, utilities, or other repairs and maintenance. For all asset classes, the Company decided to utilize the practical expedient to include both fixed lease components and fixed non-lease components in calculating the ROU asset and lease liability. The Company identified variable lease payments, such as maintenance payments based on actual activities performed or costs incurred, at lease commencement by assessing the nature of the payment provisions, including whether the payments are subject to a minimum charge. Many of the Company's leases include one or more options to renew. When it is reasonably certain that the Company will exercise the option, the Company will include the impact of the option in the lease term for purposes of determining future lease payments. As the Company is unable to determine the discount rate implicit in its lease agreements, the Company uses its incremental borrowing rate on the commencement date to calculate the present value of future payments. |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregated Revenues by Industry and Key Geographic Location | The following series of tables present the Company's disaggregated revenue: Revenue by industry was as follows: Three Months Ended September 30, 2020 Services International Products Corp/Elim Total Oil & Gas $ 72,195 $ 9,749 $ 51 $ — $ 81,995 Aerospace & Defense 10,904 3,676 72 — 14,652 Industrials 12,209 5,261 442 — 17,912 Power generation & Transmission 9,053 2,054 390 — 11,497 Other Process Industries 6,023 2,373 85 — 8,481 Infrastructure, Research & Engineering 5,309 2,245 1,223 — 8,777 Other 4,028 1,119 1,669 (2,236) 4,580 Total $ 119,721 $ 26,477 $ 3,932 $ (2,236) $ 147,894 Three Months Ended September 30, 2019 Services International Products Corp/Elim Total Oil & Gas $ 100,927 $ 11,561 $ 71 $ — $ 112,559 Aerospace & Defense 12,420 9,626 438 — 22,484 Industrials 15,612 5,453 506 — 21,571 Power generation & Transmission 7,215 3,462 461 — 11,138 Other Process Industries 6,942 2,674 304 — 9,920 Infrastructure, Research & Engineering 4,205 1,964 2,964 — 9,133 Other 5,251 2,310 777 (2,951) 5,387 Total $ 152,572 $ 37,050 $ 5,521 $ (2,951) $ 192,192 Nine Months Ended September 30, 2020 Services International Products Corp/Elim Total Oil & Gas $ 214,773 $ 26,192 $ 214 $ — $ 241,179 Aerospace & Defense 39,804 14,686 370 — 54,860 Industrials 35,374 13,997 1,349 — 50,720 Power generation & Transmission 21,800 4,958 1,888 — 28,646 Other Process Industries 17,026 7,103 162 — 24,291 Infrastructure, Research & Engineering 12,820 6,726 3,683 — 23,229 Other 7,674 3,225 3,080 (5,110) 8,869 Total $ 349,271 $ 76,887 $ 10,746 $ (5,110) $ 431,794 Nine Months Ended September 30, 2019 Services International Products Corp/Elim Total Oil & Gas $ 301,696 $ 33,033 $ 551 $ — $ 335,280 Aerospace & Defense 38,725 31,783 1,060 — 71,568 Industrials 51,373 15,987 1,585 — 68,945 Power generation & Transmission 21,829 7,383 2,328 — 31,540 Other Process Industries 19,644 7,420 376 — 27,440 Infrastructure, Research & Engineering 9,601 7,214 4,869 — 21,684 Other 11,211 6,482 2,453 (7,008) 13,138 Total $ 454,079 $ 109,302 $ 13,222 $ (7,008) $ 569,595 Revenue per key geographic location was as follows: Three Months Ended September 30, 2020 Services International Products Corp/Elim Total United States $ 100,586 $ 193 $ 1,538 $ (912) $ 101,405 Other Americas 18,767 1,100 75 (124) 19,818 Europe 350 24,790 1,002 (1,088) 25,054 Asia-Pacific 18 394 1,317 (112) 1,617 Total $ 119,721 $ 26,477 $ 3,932 $ (2,236) $ 147,894 Three Months Ended September 30, 2019 Services International Products Corp/Elim Total United States 123,585 $ 128 $ 3,780 $ (1,084) $ 126,409 Other Americas 26,981 1,842 72 32 28,927 Europe 1,157 31,817 513 (1,844) 31,643 Asia-Pacific 849 3,263 1,156 (55) 5,213 Total $ 152,572 $ 37,050 $ 5,521 $ (2,951) $ 192,192 Nine Months Ended September 30, 2020 Services International Products Corp/Elim Total United States $ 298,372 $ 507 $ 5,150 $ (2,433) $ 301,596 Other Americas 49,548 3,564 425 (370) 53,167 Europe 721 71,056 1,930 (2,129) 71,578 Asia-Pacific 630 1,760 3,241 (178) 5,453 Total $ 349,271 $ 76,887 $ 10,746 $ (5,110) $ 431,794 Nine Months Ended September 30, 2019 Services International Products Corp/Elim Total United States $ 368,600 $ 461 $ 8,727 $ (3,638) $ 374,150 Other Americas 82,494 5,757 209 (232) 88,228 Europe 1,855 97,098 1,370 (3,079) 97,244 Asia-Pacific 1,130 5,986 2,916 (59) 9,973 Total $ 454,079 $ 109,302 $ 13,222 $ (7,008) $ 569,595 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Option Activity | The following table sets forth a summary of the stock option activity, weighted-average exercise prices and options outstanding as of September 30, 2020 and September 30, 2019: Nine months ended September 30, 2020 2019 Common Stock Options Weighted Average Exercise Price Common Stock Options Weighted Average Exercise Price Outstanding at beginning of period: 5 $ 22.35 2,105 $ 13.47 Granted — $ — — $ — Exercised — $ — (2,093) $ 13.45 Expired or forfeited — $ — (7) $ 10.00 Outstanding at end of period: 5 $ 22.35 5 $ 22.35 |
Schedule of Vesting Activity of Restricted Stock Unit Awards | A summary of the vesting activity of restricted stock unit awards, with the respective fair value of the awards, is as follows: Nine months ended September 30, 2020 2019 Restricted stock awards vested 183 148 Fair value of awards vested $ 719 $ 2,168 |
Schedule of Fully-vested Common Stock Issued to Non-employee Directors | A summary of the fully-vested common stock the Company issued to its six non-employee directors, in connection with its non-employee director compensation plan, is as follows: Nine months ended September 30, 2020 2019 Awards issued 68 30 Grant date fair value of awards issued $ 326 $ 450 |
Schedule of Company's Outstanding, Nonvested Restricted Share Units and Performance Restricted Stock Units | A summary of the Company's outstanding, non-vested restricted share units is as follows: Nine months ended September 30, 2020 2019 Units Weighted Units Weighted Outstanding at beginning of period: 559 $ 16.92 443 $ 20.55 Granted 557 $ 3.77 334 $ 14.04 Released (183) $ 18.44 (148) $ 20.17 Forfeited (32) $ 9.87 (36) $ 18.38 Outstanding at end of period: 901 $ 8.72 593 $ 17.08 A summary of the Company's PRSU activity is as follows: Nine months ended September 30, 2020 2019 Units Weighted Units Weighted Outstanding at beginning of period: 260 $ 16.77 277 $ 17.80 Granted 292 $ 3.68 190 $ 13.63 Performance condition adjustments (145) $ 3.54 (36) $ 14.06 Released (78) $ 15.43 (77) $ 15.86 Forfeited — $ — — $ — Outstanding at end of period: 329 $ 11.09 354 $ 16.45 |
Earnings (loss) per Share (Tabl
Earnings (loss) per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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 September 30, Nine months ended September 30, 2020 2019 2020 2019 Basic earnings (loss) per share: Numerator: Net income (loss) attributable to Mistras Group, Inc. $ 1,523 $ 3,093 $ (99,642) $ 5,231 Denominator: Weighted-average common shares outstanding 29,177 28,800 29,086 28,678 Basic earnings (loss) per share $ 0.05 $ 0.11 $ (3.43) $ 0.18 Diluted earnings (loss) per share: Numerator: Net income (loss) attributable to Mistras Group, Inc. $ 1,523 $ 3,093 $ (99,642) $ 5,231 Denominator: Weighted-average common shares outstanding 29,177 28,800 29,086 28,678 Dilutive effect of stock options outstanding — 129 — 147 Dilutive effect of restricted stock units outstanding (1) 134 227 — 197 29,311 29,156 29,086 29,022 Diluted earnings (loss) per share $ 0.05 $ 0.11 $ (3.43) $ 0.18 _______________ (1) For the nine months ended September 30, 2020, 213 thousand shares related to restricted stock were excluded from the calculation of diluted EPS due to the net loss for the period. |
Acquisitions and Dispositions (
Acquisitions and Dispositions (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of Estimated Fair Values of Assets Acquired and Liabilities Assumed | The following table summarizes the final fair value of the assets acquired and liabilities assumed, the Company's allocation of purchase price and any subsequent adjustments made for the September 2019 acquisition: Cash paid $ 4,380 Working capital adjustments (152) Fair value of contingent consideration 1,342 Total consideration $ 5,570 Current net assets $ 142 Other assets 34 Property, plant and equipment 65 Intangibles 3,594 Goodwill 1,735 Net assets acquired $ 5,570 |
Schedule of Acquisition-related Expenses | These amounts are reported as Acquisition-related expense, net on the Unaudited Condensed Consolidated Statements of Income (Loss) and were as follows for the three and nine months ended September 30, 2020 and 2019: Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Due diligence, professional fees and other transaction costs $ — $ 93 $ — $ 433 Adjustments to fair value of contingent consideration liabilities 709 (125) 186 537 Acquisition-related expense, net $ 709 $ (32) $ 186 $ 970 |
Accounts Receivable, net (Table
Accounts Receivable, net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable, Net | Accounts receivable consisted of the following: September 30, 2020 December 31, 2019 Trade accounts receivable $ 122,515 $ 144,282 Allowance for doubtful accounts (8,425) (8,285) Accounts receivable, net $ 114,090 $ 135,997 |
Property, Plant and Equipment_2
Property, Plant and Equipment, net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment, Net | Property, plant and equipment consisted of the following: Useful Life (Years) September 30, 2020 December 31, 2019 Land $ 2,694 $ 2,672 Buildings and improvements 30-40 25,114 24,537 Office furniture and equipment 5-8 19,924 17,227 Machinery and equipment 5-7 231,890 225,974 279,622 270,410 Accumulated depreciation and amortization (187,851) (171,803) Property, plant and equipment, net $ 91,771 $ 98,607 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Carrying Amount of Goodwill | Changes in the carrying amount of goodwill by segment is shown below: Services International Products and Systems Total Balance at December 31, 2019 $ 247,215 $ 35,195 $ — $ 282,410 Goodwill acquired during the period — — — — Impairment charges (57,227) (19,862) — (77,089) Adjustments to preliminary purchase price allocations 200 — — 200 Foreign currency translation (3,735) (163) — (3,898) Balance at September 30, 2020 $ 186,453 $ 15,170 $ — $ 201,623 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Schedule of Net Carrying Amount of Intangible Assets | The gross amount, accumulated amortization and net carrying amount of intangible assets were as follows: September 30, 2020 December 31, 2019 Useful Life Gross Amount Accumulated Amortization Impairment Net Carrying Amount Gross Amount Accumulated Amortization Net Carrying Amount Customer relationships 5-18 $ 114,174 $ (72,796) $ (2,206) $ 39,172 $ 113,861 $ (67,853) $ 46,008 Software/Technology 3-15 75,739 (22,323) (25,874) 27,542 77,914 (18,756) 59,158 Covenants not to compete 2-5 12,735 (11,990) (212) 533 12,795 (11,630) 1,165 Other 2-12 10,950 (8,306) (502) 2,142 10,813 (7,607) 3,206 Total $ 213,598 $ (115,415) $ (28,794) $ 69,389 $ 215,383 $ (105,846) $ 109,537 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following: September 30, 2020 December 31, 2019 Accrued salaries, wages and related employee benefits $ 28,612 $ 30,072 Contingent consideration, current portion 1,971 2,614 Accrued workers’ compensation and health benefits 4,803 4,467 Deferred revenue 5,982 5,860 Pension accrual 2,519 2,519 Right-of-use liability - operating 9,944 10,133 Other accrued expenses 24,584 25,724 Total $ 78,415 $ 81,389 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | Long-term debt consisted of the following: September 30, 2020 December 31, 2019 Senior credit facility $ 135,430 $ 151,773 Senior secured term loan, net of unamortized debt issuance costs of $0.3 million and $0.1 million 90,973 94,919 Other 10,103 8,021 Total debt 236,506 254,713 Less: Current portion (9,889) (6,593) Long-term debt, net of current portion $ 226,617 $ 248,120 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Changes in Fair Value of Level 3 Contingent Consideration | The following table represents the changes in the fair value of Level 3 contingent consideration: Nine months ended September 30, 2020 2019 Beginning balance $ 3,216 $ 2,365 Acquisitions 200 1,081 Payments (1,337) (755) Accretion of liability 33 85 Revaluation 153 452 Foreign currency translation (23) 50 Ending balance $ 2,242 $ 3,278 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information | The Company’s Condensed Consolidated Balance Sheets includes the following related to operating leases: Leases Classification September 30, 2020 December 31, 2019 Assets ROU assets Other Assets $ 45,497 $ 45,817 Liabilities ROU - current Accrued and other current liabilities $ 9,944 $ 10,133 ROU liability - long-term Other liabilities 36,821 36,750 Total ROU liabilities $ 46,765 $ 46,883 |
Schedule of Components of Lease Costs and Other Information Related to Leases | The components of lease costs were as follows: Three months ended September 30, Nine months ended September 30, Classification 2020 2019 2020 2019 Finance lease expense Amortization of ROU assets Depreciation and amortization $ 1,081 $ 1,205 $ 3,495 $ 3,605 Interest on lease liabilities Interest expense 207 194 650 578 Operating lease expense Cost of revenue; Selling, general & administrative expenses 3,341 3,230 9,970 9,453 Short-term lease expense Cost of revenue; Selling, general & administrative expenses 11 12 60 18 Variable lease expense Cost of revenue; Selling, general & administrative expenses (4) 282 441 828 Total $ 4,636 $ 4,923 $ 14,616 $ 14,482 Additional information related to leases was as follows: Nine months ended September 30, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities for finance and operating leases Finance - financing cash flows $ 3,078 $ 3,338 Finance - operating cash flows $ 650 $ 578 Operating - operating cash flows $ 9,819 $ 9,361 ROU assets obtained in the exchange for lease liabilities Finance leases $ 1,607 $ 5,536 Operating leases $ 6,919 $ 12,766 Weighted-average remaining lease term (in years) Finance leases 5.9 6.0 Operating leases 5.9 6.1 Weighted-average discount rate Finance leases 5.8 % 6.2 % Operating leases 5.8 % 6.0 % |
Schedule of Maturities of Operating Lease Liabilities | Maturities of lease liabilities as of September 30, 2020 were as follows: Finance Operating Remainder of 2020 $ 2,034 $ 3,316 2021 4,621 11,889 2022 3,776 9,818 2023 2,897 8,284 2024 1,971 6,578 Thereafter 1,159 16,084 Total 16,458 55,969 Less: Present value discount (1,516) (9,204) Lease liability $ 14,942 $ 46,765 |
Schedule of Maturities of Finance Lease Liabilities | Maturities of lease liabilities as of September 30, 2020 were as follows: Finance Operating Remainder of 2020 $ 2,034 $ 3,316 2021 4,621 11,889 2022 3,776 9,818 2023 2,897 8,284 2024 1,971 6,578 Thereafter 1,159 16,084 Total 16,458 55,969 Less: Present value discount (1,516) (9,204) Lease liability $ 14,942 $ 46,765 |
Segment Disclosure (Tables)
Segment Disclosure (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Consolidated Financial Information by Segment | Selected consolidated financial information by segment for the periods shown was as follows: (with intercompany transactions eliminated in Corporate and eliminations) Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Revenue Services $ 119,721 $ 152,572 $ 349,271 $ 454,079 International 26,477 37,050 76,887 109,302 Products and Systems 3,932 5,521 10,746 13,222 Corporate and eliminations (2,236) (2,951) (5,110) (7,008) $ 147,894 $ 192,192 $ 431,794 $ 569,595 Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Gross profit Services $ 37,603 $ 43,330 $ 103,780 $ 127,903 International 8,197 11,695 21,612 33,113 Products and Systems 1,628 2,739 3,834 5,803 Corporate and eliminations (44) 5 (40) (105) $ 47,384 $ 57,769 $ 129,186 $ 166,714 Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Income (loss) from operations Services $ 13,599 $ 15,757 $ (57,058) $ 40,715 International (66) 2,921 (22,422) 5,155 Products and Systems (160) 509 (1,936) (1,224) Corporate and eliminations (7,631) (8,408) (24,453) (22,844) $ 5,742 $ 10,779 $ (105,869) $ 21,802 Income (loss) from operations by operating segment includes intercompany transactions, which are eliminated in Corporate and eliminations. Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Depreciation and amortization Services $ 6,315 $ 6,882 $ 19,601 $ 21,360 International 2,216 2,027 6,433 6,158 Products and Systems 248 312 756 901 Corporate and eliminations (17) 50 (31) 121 $ 8,762 $ 9,271 $ 26,759 $ 28,540 September 30, 2020 December 31, 2019 Intangible assets, net Services $ 59,397 $ 98,284 International 8,748 9,814 Products and Systems 1,101 1,181 Corporate and eliminations 143 258 $ 69,389 $ 109,537 September 30, 2020 December 31, 2019 Total assets Services $ 416,532 $ 537,518 International 127,381 153,380 Products and Systems 14,273 16,028 Corporate and eliminations 22,589 12,952 $ 580,775 $ 719,878 |
Description of Business_and B_3
Description of Business and Basis of Presentation (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Jul. 31, 2020 | Mar. 31, 2020 | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2019 | Sep. 30, 2020USD ($) | Sep. 30, 2019 | Dec. 31, 2019USD ($) | |
Restructuring Cost and Reserve [Line Items] | |||||||||
Goodwill impairment charge | $ 77,089,000 | ||||||||
VIE assets | $ 580,775,000 | $ 580,775,000 | $ 719,878,000 | ||||||
Effective income tax rate | 26.00% | 61.00% | 14.00% | 55.00% | |||||
VIE Primary Beneficiary | Limited Partnership | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Limited partner, ownership percentage | 49.00% | ||||||||
Corporate general partner, ownership percentage | 49.00% | ||||||||
VIE assets | $ 0 | $ 0 | |||||||
VIE revenues | 0 | ||||||||
COVID-19 | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Goodwill impairment charge | $ 77,100,000 | ||||||||
Impairment of intangibles | 28,800,000 | ||||||||
Impairment of ROU assets | $ 200,000 | ||||||||
COVID-19 | Cost Reduction and Efficiency Program | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Quarterly payment reduction in director's fee payments | $ 3,750,000 | $ 3,750,000 | |||||||
COVID-19 | Cost Reduction and Efficiency Program | Minimum | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Salary reduction percentage | 0.25 | ||||||||
COVID-19 | Cost Reduction and Efficiency Program | Maximum | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Salary reduction percentage | 0.45 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue recognized that was included in contract liability balance at the beginning of the year | $ 4.4 | $ 3.4 |
Revenue, practical expedient, incremental cost of obtaining a contract, maximum period | 1 year | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue, remaining performance obligation, expected timing of satisfaction period | 1 year |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 147,894 | $ 192,192 | $ 431,794 | $ 569,595 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 101,405 | 126,409 | 301,596 | 374,150 |
Other Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 19,818 | 28,927 | 53,167 | 88,228 |
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 25,054 | 31,643 | 71,578 | 97,244 |
Asia-Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,617 | 5,213 | 5,453 | 9,973 |
Oil & Gas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 81,995 | 112,559 | 241,179 | 335,280 |
Aerospace & Defense | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 14,652 | 22,484 | 54,860 | 71,568 |
Industrials | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 17,912 | 21,571 | 50,720 | 68,945 |
Power generation & Transmission | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 11,497 | 11,138 | 28,646 | 31,540 |
Other Process Industries | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 8,481 | 9,920 | 24,291 | 27,440 |
Infrastructure, Research & Engineering | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 8,777 | 9,133 | 23,229 | 21,684 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 4,580 | 5,387 | 8,869 | 13,138 |
Operating segments | Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 119,721 | 152,572 | 349,271 | 454,079 |
Operating segments | Services | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 100,586 | 123,585 | 298,372 | 368,600 |
Operating segments | Services | Other Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 18,767 | 26,981 | 49,548 | 82,494 |
Operating segments | Services | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 350 | 1,157 | 721 | 1,855 |
Operating segments | Services | Asia-Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 18 | 849 | 630 | 1,130 |
Operating segments | Services | Oil & Gas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 72,195 | 100,927 | 214,773 | 301,696 |
Operating segments | Services | Aerospace & Defense | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 10,904 | 12,420 | 39,804 | 38,725 |
Operating segments | Services | Industrials | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 12,209 | 15,612 | 35,374 | 51,373 |
Operating segments | Services | Power generation & Transmission | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 9,053 | 7,215 | 21,800 | 21,829 |
Operating segments | Services | Other Process Industries | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 6,023 | 6,942 | 17,026 | 19,644 |
Operating segments | Services | Infrastructure, Research & Engineering | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 5,309 | 4,205 | 12,820 | 9,601 |
Operating segments | Services | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 4,028 | 5,251 | 7,674 | 11,211 |
Operating segments | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 26,477 | 37,050 | 76,887 | 109,302 |
Operating segments | International | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 193 | 128 | 507 | 461 |
Operating segments | International | Other Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,100 | 1,842 | 3,564 | 5,757 |
Operating segments | International | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 24,790 | 31,817 | 71,056 | 97,098 |
Operating segments | International | Asia-Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 394 | 3,263 | 1,760 | 5,986 |
Operating segments | International | Oil & Gas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 9,749 | 11,561 | 26,192 | 33,033 |
Operating segments | International | Aerospace & Defense | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 3,676 | 9,626 | 14,686 | 31,783 |
Operating segments | International | Industrials | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 5,261 | 5,453 | 13,997 | 15,987 |
Operating segments | International | Power generation & Transmission | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 2,054 | 3,462 | 4,958 | 7,383 |
Operating segments | International | Other Process Industries | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 2,373 | 2,674 | 7,103 | 7,420 |
Operating segments | International | Infrastructure, Research & Engineering | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 2,245 | 1,964 | 6,726 | 7,214 |
Operating segments | International | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,119 | 2,310 | 3,225 | 6,482 |
Operating segments | Products | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 3,932 | 5,521 | 10,746 | 13,222 |
Operating segments | Products | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,538 | 3,780 | 5,150 | 8,727 |
Operating segments | Products | Other Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 75 | 72 | 425 | 209 |
Operating segments | Products | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,002 | 513 | 1,930 | 1,370 |
Operating segments | Products | Asia-Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,317 | 1,156 | 3,241 | 2,916 |
Operating segments | Products | Oil & Gas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 51 | 71 | 214 | 551 |
Operating segments | Products | Aerospace & Defense | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 72 | 438 | 370 | 1,060 |
Operating segments | Products | Industrials | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 442 | 506 | 1,349 | 1,585 |
Operating segments | Products | Power generation & Transmission | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 390 | 461 | 1,888 | 2,328 |
Operating segments | Products | Other Process Industries | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 85 | 304 | 162 | 376 |
Operating segments | Products | Infrastructure, Research & Engineering | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,223 | 2,964 | 3,683 | 4,869 |
Operating segments | Products | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,669 | 777 | 3,080 | 2,453 |
Corp/Elim | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | (2,236) | (2,951) | (5,110) | (7,008) |
Corp/Elim | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | (912) | (1,084) | (2,433) | (3,638) |
Corp/Elim | Other Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | (124) | 32 | (370) | (232) |
Corp/Elim | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | (1,088) | (1,844) | (2,129) | (3,079) |
Corp/Elim | Asia-Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | (112) | (55) | (178) | (59) |
Corp/Elim | Oil & Gas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Corp/Elim | Aerospace & Defense | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Corp/Elim | Industrials | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Corp/Elim | Power generation & Transmission | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Corp/Elim | Other Process Industries | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Corp/Elim | Infrastructure, Research & Engineering | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Corp/Elim | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ (2,236) | $ (2,951) | $ (5,110) | $ (7,008) |
Share-Based Compensation - Equi
Share-Based Compensation - Equity Incentive Plans (Details) | May 19, 2020shares | Sep. 30, 2020planshares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of equity incentive plans | plan | 2 | |
2009 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of awards that may be granted (in shares) | 0 | |
2016 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Increase in total number of shares authorized for issuance (in shares) | 2,000,000 | |
Total number of shares authorized for issuance (in shares) | 3,700,000 |
Share-Based Compensation - Stoc
Share-Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation costs | $ 0 | $ 0 | ||
Common Stock Options | ||||
Outstanding at the beginning of the period (in shares) | 5 | 2,105 | ||
Granted (in shares) | 0 | 0 | ||
Exercised (in shares) | 0 | (2,093) | ||
Expired or forfeited (in shares) | 0 | (7) | ||
Outstanding at the end of the period (in shares) | 5 | 5 | 5 | 5 |
Weighted Average Exercise Price | ||||
Outstanding at the beginning of period (in dollars per share) | $ 22.35 | $ 13.47 | ||
Granted (in dollars per share) | 0 | 0 | ||
Exercised (in dollars per share) | 0 | 13.45 | ||
Expired or forfeited (in dollars per share) | 0 | 10 | ||
Outstanding at the end of period (in dollars per share) | $ 22.35 | $ 22.35 | $ 22.35 | $ 22.35 |
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Recognized share-based compensation expense | $ 0 | $ 0 | $ 0 | $ 0 |
Share-Based Compensation - Rest
Share-Based Compensation - Restricted Stock Unit Awards - Narrative (Details) - Restricted Stock Unit Awards - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Recognized share-based compensation expense (benefit) | $ 1.1 | $ 1 | $ 3.2 | $ 3 |
Unrecognized compensation cost, net of estimated forfeitures | $ 5.5 | $ 5.5 | ||
Weighted-average period over which unrecognized compensation cost is expected to be recognized (years) | 2 years 4 months 24 days |
Share-Based Compensation - Vest
Share-Based Compensation - Vesting Activity of Restricted Stock Unit Awards (Details) - Restricted Stock Unit Awards - USD ($) shares in Thousands, $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock awards vested (in shares) | 183 | 148 |
Fair value of awards vested | $ 719 | $ 2,168 |
Share-Based Compensation - Full
Share-Based Compensation - Fully-vested Common Stock Issued to Non-employee Directors (Details) - Common Stock - Non-employee Directors shares in Thousands, $ in Thousands | 9 Months Ended | |
Sep. 30, 2020USD ($)directorshares | Sep. 30, 2019USD ($)shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of non-employee directors to whom fully vested common stock is granted | director | 6 | |
Awards issued (in shares) | shares | 68 | 30 |
Grant date fair value of awards issued | $ | $ 326 | $ 450 |
Share-Based Compensation - Re_2
Share-Based Compensation - Restricted Stock Units Awards - Activity (Details) - Restricted Stock Unit Awards - $ / shares shares in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Restricted Stock Units Awards (Units) | ||
Outstanding at beginning of period (in shares) | 559 | 443 |
Granted (in shares) | 557 | 334 |
Released (in shares) | (183) | (148) |
Forfeited (in shares) | (32) | (36) |
Outstanding at end of period (in shares) | 901 | 593 |
Weighted Average Grant-Date Fair Value (in dollars per share) | ||
Outstanding at the beginning of period (in dollars per share) | $ 16.92 | $ 20.55 |
Granted (in dollars per share) | 3.77 | 14.04 |
Released (in dollars per share) | 18.44 | 20.17 |
Forfeited (in dollars per share) | 9.87 | 18.38 |
Outstanding at end of period (in dollars per share) | $ 8.72 | $ 17.08 |
Share-Based Compensation - Perf
Share-Based Compensation - Performance Restricted Stock Units - Narrative (Details) - PRSUs shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020USD ($)shares | Sep. 30, 2019USD ($)shares | Sep. 30, 2020USD ($)metricshares | Sep. 30, 2019USD ($)shares | Dec. 31, 2019metricshares | Dec. 31, 2018shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of performance award metrics | 4 | |||||
Number of additional performance award metrics | 2 | |||||
Number of units increased (decreased) during the period (in shares) | shares | (146) | (33) | 1 | (3) | ||
Recognized share-based compensation expense (benefit) | $ | $ 0.2 | $ 0.5 | $ 0.8 | $ 1.2 | ||
Unrecognized compensation cost | $ | $ 1.3 | $ 1.3 | ||||
Nonvested shares outstanding (in shares) | shares | 329 | 354 | 329 | 354 | 260 | 277 |
Weighted-average period over which unrecognized compensation cost is expected to be recognized (years) | 1 year 9 months 18 days | |||||
Executive and Senior Officers | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Performance period (years) | 1 year | |||||
Number of performance award metrics | 3 | |||||
Requisite service period (years) | 5 years | |||||
Executive and Senior Officers | Anniversary 1 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting rights, percentage | 25.00% | |||||
Executive and Senior Officers | Anniversary 2 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting rights, percentage | 25.00% | |||||
Executive and Senior Officers | Anniversary 3 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting rights, percentage | 25.00% | |||||
Executive and Senior Officers | Anniversary 4 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting rights, percentage | 25.00% |
Share-Based Compensation - Pe_2
Share-Based Compensation - Performance Restricted Stock Units - Activity (Details) - PRSUs - $ / shares shares in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Performance Restricted Stock (Units) | ||
Outstanding at beginning of period (in shares) | 260 | 277 |
Granted (in shares) | 292 | 190 |
Performance condition adjustments (in shares) | (145) | (36) |
Released (in shares) | (78) | (77) |
Forfeited (in shares) | 0 | 0 |
Outstanding at end of period (in shares) | 329 | 354 |
Weighted Average Grant-Date Fair Value (in dollars per share) | ||
Outstanding at the beginning of period (in dollars per share) | $ 16.77 | $ 17.80 |
Granted (in dollars per share) | 3.68 | 13.63 |
Performance condition adjustments (in dollars per share) | 3.54 | 14.06 |
Released (in dollars per share) | 15.43 | 15.86 |
Forfeited (in dollars per share) | 0 | 0 |
Outstanding at end of period (in dollars per share) | $ 11.09 | $ 16.45 |
Earnings (loss) per Share (Deta
Earnings (loss) per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Basic earnings (loss) per share: | ||||
Net income (loss) attributable to Mistras Group, Inc. | $ 1,523 | $ 3,093 | $ (99,642) | $ 5,231 |
Denominator: | ||||
Weighted-average common shares outstanding (in shares) | 29,177 | 28,800 | 29,086 | 28,678 |
Basic earnings (loss) per share (in dollars per share) | $ 0.05 | $ 0.11 | $ (3.43) | $ 0.18 |
Denominator: | ||||
Weighted-average common shares outstanding (in shares) | 29,177 | 28,800 | 29,086 | 28,678 |
Dilutive effect of stock options outstanding (in shares) | 0 | 129 | 0 | 147 |
Dilutive effect of restricted stock units outstanding (in shares) | 134 | 227 | 0 | 197 |
Weighted average common shares outstanding, diluted (in shares) | 29,311 | 29,156 | 29,086 | 29,022 |
Diluted earnings (loss) per share (in dollars per share) | $ 0.05 | $ 0.11 | $ (3.43) | $ 0.18 |
Restricted Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potential common stock excluded from computation of diluted earnings per share due to net loss for the period (in shares) | 213 |
Acquisitions and Dispositions -
Acquisitions and Dispositions - Narrative (Details) $ in Thousands | 1 Months Ended | 9 Months Ended |
Sep. 30, 2019USD ($)entity | Sep. 30, 2020entity | |
Business Acquisition [Line Items] | ||
Number of acquisitions | entity | 0 | |
Acquisition that Provides Pipeline Integrity Management Software | ||
Business Acquisition [Line Items] | ||
Number of acquisitions | entity | 1 | |
Aggregate consideration paid | $ | $ 4,380 | |
Contingent consideration, maximum amount | $ | $ 4,300 | |
Contingent consideration payment period based upon achievement of specific performance metrics | 3 years |
Acquisitions and Dispositions_2
Acquisitions and Dispositions - Estimated Fair Value of the Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | 1 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2020 | Dec. 31, 2019 | |
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||
Goodwill | $ 201,623 | $ 282,410 | |
Acquisition that Provides Pipeline Integrity Management Software | |||
Business Combination, Consideration Transferred [Abstract] | |||
Cash paid | $ 4,380 | ||
Working capital adjustments | (152) | ||
Fair value of contingent consideration | 1,342 | ||
Total consideration | 5,570 | ||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||
Current net assets | 142 | ||
Other assets | 34 | ||
Property, plant and equipment | 65 | ||
Intangibles | 3,594 | ||
Goodwill | 1,735 | ||
Net assets acquired | $ 5,570 |
Acquisitions and Dispositions_3
Acquisitions and Dispositions - Acquisition-Related Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Business Combinations [Abstract] | ||||
Due diligence, professional fees and other transaction costs | $ 0 | $ 93 | $ 0 | $ 433 |
Adjustments to fair value of contingent consideration liabilities | 709 | (125) | 186 | 537 |
Acquisition-related expense, net | $ 709 | $ (32) | $ 186 | $ 970 |
Accounts Receivable, net (Detai
Accounts Receivable, net (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Receivables [Abstract] | ||
Trade accounts receivable | $ 122,515 | $ 144,282 |
Allowance for doubtful accounts | (8,425) | (8,285) |
Accounts receivable, net | $ 114,090 | $ 135,997 |
Accounts Receivable, net - Narr
Accounts Receivable, net - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Dec. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Unbilled revenues accrued | $ 22,200 | $ 20,500 | $ 20,500 | |||||
Receivables outstanding balance | 135,997 | 114,090 | 114,090 | |||||
Reserve (reversal) of allowance for doubtful accounts receivables | 0 | $ 0 | 0 | $ 2,798 | ||||
Texas Customer | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Receivables outstanding balance | $ 1,400 | $ 1,400 | ||||||
Amount of damages claimed | $ 1,400 | |||||||
Reserve (reversal) of allowance for doubtful accounts receivables | $ 300 | $ 1,100 | ||||||
Renewable Energy Industry Customer | Services | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Reserve (reversal) of allowance for doubtful accounts receivables | $ (1,000) | $ 5,700 | $ 700 | |||||
Recovery from bad debt provision | $ 1,700 | $ 200 |
Property, Plant and Equipment_3
Property, Plant and Equipment, net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment, net | |||||
Property, plant and equipment, gross | $ 279,622 | $ 279,622 | $ 270,410 | ||
Accumulated depreciation and amortization | (187,851) | (187,851) | (171,803) | ||
Property, plant and equipment, net | 91,771 | 91,771 | 98,607 | ||
Depreciation and amortization expense | 6,200 | $ 5,800 | 18,300 | $ 18,000 | |
Depreciation and amortization expense | 6,200 | $ 5,800 | 18,300 | $ 18,000 | |
Land | |||||
Property, Plant and Equipment, net | |||||
Property, plant and equipment, gross | 2,694 | 2,694 | 2,672 | ||
Buildings and improvements | |||||
Property, Plant and Equipment, net | |||||
Property, plant and equipment, gross | 25,114 | $ 25,114 | 24,537 | ||
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 | 19,924 | $ 19,924 | 17,227 | ||
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 | $ 231,890 | $ 231,890 | $ 225,974 | ||
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 - Changes in Carrying
Goodwill - Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Goodwill [Roll Forward] | |
Balance at December 31, 2019 | $ 282,410 |
Goodwill acquired during the period | 0 |
Impairment charges | (77,089) |
Adjustments to preliminary purchase price allocations | 200 |
Foreign currency translation | (3,898) |
Balance at September 30, 2020 | 201,623 |
Services | |
Goodwill [Roll Forward] | |
Balance at December 31, 2019 | 247,215 |
Goodwill acquired during the period | 0 |
Impairment charges | (57,227) |
Adjustments to preliminary purchase price allocations | 200 |
Foreign currency translation | (3,735) |
Balance at September 30, 2020 | 186,453 |
International | |
Goodwill [Roll Forward] | |
Balance at December 31, 2019 | 35,195 |
Goodwill acquired during the period | 0 |
Impairment charges | (19,862) |
Adjustments to preliminary purchase price allocations | 0 |
Foreign currency translation | (163) |
Balance at September 30, 2020 | 15,170 |
Products and Systems | |
Goodwill [Roll Forward] | |
Balance at December 31, 2019 | 0 |
Goodwill acquired during the period | 0 |
Impairment charges | 0 |
Adjustments to preliminary purchase price allocations | 0 |
Foreign currency translation | 0 |
Balance at September 30, 2020 | $ 0 |
Goodwill - Narrative (Details)
Goodwill - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | |
Goodwill [Line Items] | |||
Goodwill impairment charge | $ 77,089 | ||
Cumulative goodwill impairment | 100,200 | $ 23,100 | |
COVID-19 | |||
Goodwill [Line Items] | |||
Goodwill impairment charge | $ 77,100 | ||
Services | |||
Goodwill [Line Items] | |||
Goodwill impairment charge | 57,227 | ||
Cumulative goodwill impairment | 57,200 | ||
Services | COVID-19 | |||
Goodwill [Line Items] | |||
Goodwill impairment charge | 57,200 | ||
International | |||
Goodwill [Line Items] | |||
Goodwill impairment charge | 19,862 | ||
Cumulative goodwill impairment | 29,800 | 9,900 | |
European Reporting Unit | COVID-19 | |||
Goodwill [Line Items] | |||
Goodwill impairment charge | 19,300 | ||
Brazilian Reporting Unit | COVID-19 | |||
Goodwill [Line Items] | |||
Goodwill impairment charge | $ 600 | ||
Products and Systems | |||
Goodwill [Line Items] | |||
Goodwill impairment charge | 0 | ||
Cumulative goodwill impairment | $ 13,200 | $ 13,200 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | $ 213,598 | $ 215,383 |
Accumulated Amortization | (115,415) | (105,846) |
Impairment | (28,794) | |
Net Carrying Amount | 69,389 | 109,537 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 114,174 | 113,861 |
Accumulated Amortization | (72,796) | (67,853) |
Impairment | (2,206) | |
Net Carrying Amount | $ 39,172 | 46,008 |
Customer relationships | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life (Years) | 5 years | |
Customer relationships | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life (Years) | 18 years | |
Software/Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | $ 75,739 | 77,914 |
Accumulated Amortization | (22,323) | (18,756) |
Impairment | (25,874) | |
Net Carrying Amount | $ 27,542 | 59,158 |
Software/Technology | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life (Years) | 3 years | |
Software/Technology | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life (Years) | 15 years | |
Covenants not to compete | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | $ 12,735 | 12,795 |
Accumulated Amortization | (11,990) | (11,630) |
Impairment | (212) | |
Net Carrying Amount | $ 533 | 1,165 |
Covenants not to compete | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life (Years) | 2 years | |
Covenants not to compete | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life (Years) | 5 years | |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | $ 10,950 | 10,813 |
Accumulated Amortization | (8,306) | (7,607) |
Impairment | (502) | |
Net Carrying Amount | $ 2,142 | $ 3,206 |
Other | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life (Years) | 2 years | |
Other | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life (Years) | 12 years |
Intangible Assets - Narrative (
Intangible Assets - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization expense of intangibles | $ 2.6 | $ 3.4 | $ 8.5 | $ 10.5 | |
COVID-19 | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Impairment of intangibles | $ 28.8 | ||||
COVID-19 | Services | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Impairment of intangibles | 28.8 | ||||
Software/Technology | COVID-19 | Services | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Impairment of intangibles | 25.9 | ||||
Customer relationships | COVID-19 | Services | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Impairment of intangibles | 2.2 | ||||
Other | COVID-19 | Services | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Impairment of intangibles | 0.5 | ||||
Covenants not to compete | COVID-19 | Services | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Impairment of intangibles | $ 0.2 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Accrued salaries, wages and related employee benefits | $ 28,612 | $ 30,072 |
Contingent consideration, current portion | 1,971 | 2,614 |
Accrued workers’ compensation and health benefits | 4,803 | 4,467 |
Deferred revenue | 5,982 | 5,860 |
Pension accrual | 2,519 | 2,519 |
Right-of-use liability - operating | 9,944 | 10,133 |
Other accrued expenses | 24,584 | 25,724 |
Total | $ 78,415 | $ 81,389 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Total debt | $ 236,506 | $ 254,713 |
Less: Current portion | (9,889) | (6,593) |
Long-term debt, net of current portion | 226,617 | 248,120 |
Senior credit facility | ||
Debt Instrument [Line Items] | ||
Total debt | 135,430 | 151,773 |
Senior credit facility | Senior Secured Term Loan | ||
Debt Instrument [Line Items] | ||
Unamortized debt issuance costs | 300 | 100 |
Total debt | 90,973 | 94,919 |
Other | ||
Debt Instrument [Line Items] | ||
Total debt | $ 10,103 | $ 8,021 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) | May 15, 2020USD ($)d | Jun. 30, 2020USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2019USD ($) |
Debt Instrument [Line Items] | ||||
Debt outstanding | $ 236,506,000 | $ 254,713,000 | ||
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity in non-U.S. Dollar currencies | 100,000,000 | |||
Maximum amount available for the issuance of letters of credit | 20,000,000 | |||
Outstanding borrowings | 226,400,000 | |||
Outstanding letters of credit | 4,300,000 | |||
Capitalized costs associated with debt modifications | 1,200,000 | |||
Capitalized debt issuance costs expensed | $ 600,000 | |||
Debt outstanding | 135,430,000 | 151,773,000 | ||
Revolving Credit Facility | Senior Secured Term A Loan Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | 100,000,000 | |||
Debt outstanding | 90,973,000 | 94,919,000 | ||
Revolving Credit Facility | Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 300,000,000 | |||
Revolving Credit Facility | Credit Agreement | COVID-19 | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | 175,000,000 | |||
Amount deducted from aggregate cash and cash equivalents held by company and it's subsidiaries if prepayment of credit facility is required | $ 10,000,000 | |||
Number of consecutive business days | d | 2 | |||
Maximum amount outstanding under the revolving credit facility if prepayment of facility is required | $ 75,000,000 | |||
Cash and cash equivalents if prepayment of facility is required | $ 10,000,000 | |||
Revolving Credit Facility | Credit Agreement | COVID-19 | Maximum | ||||
Debt Instrument [Line Items] | ||||
Funded debt leverage ratio for acquisitions | 2.50 | |||
Pro forma funded debt leverage ratio | 3.25 | |||
Revolving Credit Facility | Credit Agreement | COVID-19 | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Margin percentage | 1.00% | |||
Revolving Credit Facility | Credit Agreement | COVID-19 | LIBOR | Minimum | ||||
Debt Instrument [Line Items] | ||||
Margin percentage | 1.50% | |||
Revolving Credit Facility | Credit Agreement | COVID-19 | LIBOR | Maximum | ||||
Debt Instrument [Line Items] | ||||
Margin percentage | 4.15% | |||
Revolving Credit Facility | Credit Agreement | COVID-19 | Quarter ending December 31, 2020 and decreasing each successive quarter | ||||
Debt Instrument [Line Items] | ||||
Funded debt leverage ratio | 5.25 | |||
Revolving Credit Facility | Credit Agreement | COVID-19 | Quarter ending September 30, 2021 and all quarterly periods thereafter | ||||
Debt Instrument [Line Items] | ||||
Funded debt leverage ratio | 3.50 | |||
Revolving Credit Facility | Credit Agreement | COVID-19 | Quarter ending March 31, 2021 | ||||
Debt Instrument [Line Items] | ||||
Fixed charge coverage ratio | 1 | |||
Revolving Credit Facility | Credit Agreement | COVID-19 | Quarter ending June 30, 2021 | ||||
Debt Instrument [Line Items] | ||||
Fixed charge coverage ratio | 1.25 | |||
Revolving Credit Facility | Credit Agreement | COVID-19 | Three months ending June 30, 2020 | ||||
Debt Instrument [Line Items] | ||||
Debt covenant, minimum EBITDA, amount | $ 3,440,000 | |||
Revolving Credit Facility | Credit Agreement | COVID-19 | Six months ending September 30, 2020 | ||||
Debt Instrument [Line Items] | ||||
Debt covenant, minimum EBITDA, amount | 24,250,000 | |||
Revolving Credit Facility | Credit Agreement | COVID-19 | Nine months ending December 31, 2020 | ||||
Debt Instrument [Line Items] | ||||
Debt covenant, minimum EBITDA, amount | 38,550,000 | |||
Revolving Credit Facility | Credit Agreement | COVID-19 | At all times through September 30, 2021 | ||||
Debt Instrument [Line Items] | ||||
Debt covenant, minimum EBITDA, amount | $ 20,000,000 | |||
Other | ||||
Debt Instrument [Line Items] | ||||
Debt outstanding | 10,103,000 | $ 8,021,000 | ||
Other | Minimum | ||||
Debt Instrument [Line Items] | ||||
Debt monthly periodic payments | $ 1,000 | |||
Interest rate | 0.40% | |||
Other | Maximum | ||||
Debt Instrument [Line Items] | ||||
Debt monthly periodic payments | $ 17,000 | |||
Interest rate | 3.50% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Contingent Consideration Liability [Roll Forward] | ||||
Revaluation | $ 709 | $ (125) | $ 186 | $ 537 |
Level 3 | ||||
Contingent Consideration Liability [Roll Forward] | ||||
Beginning balance | 3,216 | 2,365 | ||
Acquisitions | 200 | 1,081 | ||
Payments | (1,337) | (755) | ||
Accretion of liability | 33 | 85 | ||
Revaluation | 153 | 452 | ||
Foreign currency translation | (23) | 50 | ||
Ending balance | $ 2,242 | $ 3,278 | $ 2,242 | $ 3,278 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Assets | ||
ROU assets | $ 45,497 | $ 45,817 |
Liabilities | ||
ROU - current | 9,944 | 10,133 |
ROU liability - long-term | 36,821 | 36,750 |
Total ROU liabilities | $ 46,765 | $ 46,883 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:OtherNoncurrentAssetsMember | us-gaap:OtherNoncurrentAssetsMember |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | mg:AccruedExpensesAndOtherLiabilitiesCurrent | mg:AccruedExpensesAndOtherLiabilitiesCurrent |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilitiesNoncurrent | us-gaap:OtherLiabilitiesNoncurrent |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Lessee, Lease, Description [Line Items] | |||||||
ROU liabilities | $ 46,765 | $ 46,765 | $ 46,883 | ||||
Total rent payments | 9,819 | $ 9,361 | |||||
ROU finance lease assets | $ 16,000 | $ 16,000 | $ 19,200 | ||||
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization | us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization | us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization | ||||
COVID-19 | |||||||
Lessee, Lease, Description [Line Items] | |||||||
Impairment of ROU assets | $ 200 | ||||||
COVID-19 | Services | |||||||
Lessee, Lease, Description [Line Items] | |||||||
Impairment of ROU assets | $ 200 | ||||||
Operating Lease Arrangement | Company's Headquarters | |||||||
Lessee, Lease, Description [Line Items] | |||||||
ROU liabilities | $ 4,000 | 4,000 | $ 4,500 | ||||
Total rent payments | $ 100 | $ 200 | $ 500 | $ 700 | |||
Operating Lease Arrangement | Company's Headquarters | COVID-19 | |||||||
Lessee, Lease, Description [Line Items] | |||||||
Percentage of reduction of rental payments | 20.00% | ||||||
Deferral period of rental payments | 90 days |
Leases - Components of Lease Co
Leases - Components of Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Finance lease expense | ||||
Amortization of ROU assets | $ 1,081 | $ 1,205 | $ 3,495 | $ 3,605 |
Interest on lease liabilities | 207 | 194 | 650 | 578 |
Operating lease expense | 3,341 | 3,230 | 9,970 | 9,453 |
Short-term lease expense | 11 | 12 | 60 | 18 |
Variable lease expense | (4) | 282 | 441 | 828 |
Total | $ 4,636 | $ 4,923 | $ 14,616 | $ 14,482 |
Leases - Additional Information
Leases - Additional Information Related to Leases (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities for finance and operating leases | ||
Finance - financing cash flows | $ 3,078 | $ 3,338 |
Finance - operating cash flows | 650 | 578 |
Operating - operating cash flows | 9,819 | 9,361 |
ROU assets obtained in the exchange for lease liabilities | ||
Finance leases | 1,607 | 5,536 |
Operating leases | $ 6,919 | $ 12,766 |
Weighted-average remaining lease term (in years) | ||
Finance leases | 5 years 10 months 24 days | 6 years |
Operating leases | 5 years 10 months 24 days | 6 years 1 month 6 days |
Weighted-average discount rate | ||
Finance leases | 5.80% | 6.20% |
Operating leases | 5.80% | 6.00% |
Leases - Maturity of Lease Liab
Leases - Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Finance | ||
Remainder of 2020 | $ 2,034 | |
2021 | 4,621 | |
2022 | 3,776 | |
2023 | 2,897 | |
2024 | 1,971 | |
Thereafter | 1,159 | |
Total | 16,458 | |
Less: Present value discount | (1,516) | |
Lease liability | 14,942 | |
Operating | ||
Remainder of 2020 | 3,316 | |
2021 | 11,889 | |
2022 | 9,818 | |
2023 | 8,284 | |
2024 | 6,578 | |
Thereafter | 16,084 | |
Total | 55,969 | |
Less: Present value discount | (9,204) | |
Lease liability | $ 46,765 | $ 46,883 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Dec. 31, 2019USD ($)weld | Sep. 30, 2019USD ($) | Apr. 30, 2017 | Sep. 30, 2020USD ($) | Dec. 31, 2019USD ($)weld | Dec. 31, 2018USD ($) | Jan. 01, 2020USD ($) | |
Litigation | |||||||
Accounts receivable, net | $ 135,997,000 | $ 114,090,000 | $ 135,997,000 | ||||
Pension accrual | 2,519,000 | 2,519,000 | 2,519,000 | ||||
Right to Customer Contracts | Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||||||
Litigation | |||||||
Consideration received on sale of subsidiary | $ 100,000 | ||||||
Contingency charges | 300,000 | ||||||
Payments of severance obligations | 400,000 | ||||||
Reversal of severance obligations | 900,000 | ||||||
Foreign Subsidiaries | Products and Systems | Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||||||
Litigation | |||||||
Term of agreement to purchase products from the buyer on sale of subsidiary | 3 years | ||||||
Amount of purchased commitment to buy products from the buyer on sale of subsidiary | $ 2,300,000 | ||||||
Remaining balance under purchase commitment agreement | 1,300,000 | ||||||
Pension Related Contingencies | |||||||
Litigation | |||||||
Pension withdrawal expense | $ 900,000 | $ 800,000 | $ 5,900,000 | ||||
Monthly payments, excluding final settlement | 3,300,000 | ||||||
Total payments | 4,200,000 | ||||||
Severance and Labor Disputes | Germany | Affiliated Entity | |||||||
Litigation | |||||||
Temporary employment contract period | 18 months | ||||||
Acquisition-related Contingencies | |||||||
Litigation | |||||||
Potential acquisition-related contingent consideration, low end of range | 0 | ||||||
Potential acquisition-related contingent consideration, high end of range | $ 4,300,000 | ||||||
Contingent consideration payment period based upon achievement of specific performance metrics | 2 years | ||||||
Various Pipeline Projects for Texas Customer | |||||||
Litigation | |||||||
Amount of damages claimed | $ 7,600,000 | ||||||
Texas Customer | |||||||
Litigation | |||||||
Accounts receivable, net | $ 1,400,000 | ||||||
Number or welds not in compliance | weld | 66 | 66 | |||||
Number of welds inspected (over) | weld | 16,000 | 16,000 | |||||
Amount of damages claimed | $ 1,400,000 | ||||||
Texas Customer | Various Pipeline Projects for Texas Customer | |||||||
Litigation | |||||||
Amount of damages claimed | $ 1,400,000 |
Segment Disclosure (Details)
Segment Disclosure (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)segment | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment Reporting [Abstract] | |||||
Number of operating segments | segment | 3 | ||||
Financial information by segment | |||||
Revenue | $ 147,894 | $ 192,192 | $ 431,794 | $ 569,595 | |
Gross profit | 47,384 | 57,769 | 129,186 | 166,714 | |
Income (loss) from operations | 5,742 | 10,779 | (105,869) | 21,802 | |
Depreciation and amortization | 8,762 | 9,271 | 26,759 | 28,540 | |
Intangible assets, net | 69,389 | 69,389 | $ 109,537 | ||
Total assets | 580,775 | 580,775 | 719,878 | ||
Operating segments | Services | |||||
Financial information by segment | |||||
Revenue | 119,721 | 152,572 | 349,271 | 454,079 | |
Gross profit | 37,603 | 43,330 | 103,780 | 127,903 | |
Income (loss) from operations | 13,599 | 15,757 | (57,058) | 40,715 | |
Depreciation and amortization | 6,315 | 6,882 | 19,601 | 21,360 | |
Intangible assets, net | 59,397 | 59,397 | 98,284 | ||
Total assets | 416,532 | 416,532 | 537,518 | ||
Operating segments | International | |||||
Financial information by segment | |||||
Revenue | 26,477 | 37,050 | 76,887 | 109,302 | |
Gross profit | 8,197 | 11,695 | 21,612 | 33,113 | |
Income (loss) from operations | (66) | 2,921 | (22,422) | 5,155 | |
Depreciation and amortization | 2,216 | 2,027 | 6,433 | 6,158 | |
Intangible assets, net | 8,748 | 8,748 | 9,814 | ||
Total assets | 127,381 | 127,381 | 153,380 | ||
Operating segments | Products and Systems | |||||
Financial information by segment | |||||
Revenue | 3,932 | 5,521 | 10,746 | 13,222 | |
Gross profit | 1,628 | 2,739 | 3,834 | 5,803 | |
Income (loss) from operations | (160) | 509 | (1,936) | (1,224) | |
Depreciation and amortization | 248 | 312 | 756 | 901 | |
Intangible assets, net | 1,101 | 1,101 | 1,181 | ||
Total assets | 14,273 | 14,273 | 16,028 | ||
Corporate and eliminations | |||||
Financial information by segment | |||||
Revenue | (2,236) | (2,951) | (5,110) | (7,008) | |
Gross profit | (44) | 5 | (40) | (105) | |
Income (loss) from operations | (7,631) | (8,408) | (24,453) | (22,844) | |
Depreciation and amortization | (17) | $ 50 | (31) | $ 121 | |
Intangible assets, net | 143 | 143 | 258 | ||
Total assets | $ 22,589 | $ 22,589 | $ 12,952 |