MG - Earnings call transcript Q4 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen, and welcome to Mistras Group's earnings conference call for its fourth quarter ended December 31, 2017. My name is Liz, and I will be your event manager today.

We will be accepting questions after managements prepared remarks. Participating on the call from Mistras Group will be Dennis Bertolotti, the Company's President and Chief Executive Officer; Edward Prajzner, Senior Executive Vice President, Chief Financial Officer and Treasurer as well as Jon Wolk, Senior Executive Vice President and Chief Operating Officer who will be available for questions. I will now hand the conference over to Mr. Bertolotti. proceed. Please

Dennis Bertolotti

Good financial today's quarter results XX, Liz. review we ended everyone. XXXX. Group's Mistras for morning, you, call On will December Thank the fourth

to us the begin also Chief the to Operating like I he pleased been since Jon results, Officer for the comments will service today’s previous I of Group CFO. joining our He’s new to executive on to Mistras January very Before our I’d Ed thank his will my call. like would early welcome with Prajzner management’s be transition our CFO, as call. be now. succession Wolk, complete shortly. during that quarter’s and am session Q&A and Jon I essentially is report speaking

keenly prepared responsibilities going individual all are at and elaborate on our Ed’s on And forward. end this focused after remarks. initiatives the call further end will I the combined of We

prior had update Segments action and U.K. with a will this revenues call negative the provide back weakness Germany very to fourth getting Services our operational to you XXXX, and year with on primarily revenue margin. improvement XX%. of led improvement, and International due plan EBTIDA to comparison and largest fourth Ed plenty for point quarter XX% has room with performance declining outlook segment of Services, increase you basis in I'll our later markets. the up improvement up solid Now and in XX% versus quarter still adjusted gross XXXX. overall in in by a was a the XX% a the for preliminary it XXX revenues

the that fourth over operating from undertook turning prices oil dynamic Mistras and past from demonstrated operate year. even benefitting industrial X% profitability tech versus we and prior the challenges. sector to the years, earlier in the these profit energy Systems loss generally inspection in in The this With and its manage segment three prior with however the the countries. quarter industry. declining operating revenues cyclical year optimistic with through increasing improved market an improvement about entire challenging We and over break and Products currently to declines very XXXX are ability despite stabilized has within corner actions and become

momentum we our market Our months continue on very completed Mistras. believe we and growing productive value into business will XXXX QX the have us The first of last expect as is again help results in and cycle focus half by demonstrated three been once budgeting market this our as will time services improves. beyond. the delivering and our We a at share gain and busy XXXX

of fully Ed both assuming as role. now are business Wolk, executives with a reporting My regional in to Services corporate and our tactically driving Jon transitioned role role important segment, And strategically. our have key the We our forward, we to number Jon CEO and from drive to These addition repositioning performance. include perspective a actions into have taken well to walk Evolution four as directly the CEO the CFO

utilization restructured gaining the very our market the benefits focus resulting market demonstrate, the shift this team And set to in from to expect customers are our our we our acquisition we have mix, is share. provide, we and U.K. results encouraged and continue also France, this to in is provide we moves business a are of broaden In metrics Germany, pipeline. and of we on better transition quarter focused we sales improve strengthen in Segment, that seeing In We technicians position in to momentum and leadership these leadership throughout XXXX. we with fourth where continue strong XXXX. value the business International and and leadership Services XXXX new on into and reflected differentiating our services as the

will in and results changes these expect significantly both We improve Germany U.K. XXXX. in

in our we financials in Products in expectations will QX update actually take XXXX. under core the business and Finally restructured focus XXXX; through us will write-off Systems now leader Ed sale us subsidiary our for afterwards are had QX our preliminary forward. going I to the asset our give recently and installed and marketing segment for that outlook held and have for summarize impairment the initiatives

Edward Prajzner

materially remind will some remarks that made I’ll the conference results this forward-looking everyone include from differ during Dennis. you, call projected. Thank those actual could statements; company’s

that yesterday’s factors are could discussion differ report annual not that and to most These and accordance measures Reconciliations can tables The with the Financial on SEC. in GAAP Financial XX-K directly comparable in be this report are certain section the press website Form on U.S. on the the GAAP. current of company’s will related call results actual filed in in measures and other the financial Form the were of discussed the to cause non-U.S. SEC release, include conference Some website. the with in in those prepared on our most recent contained U.S. available found in X-K. investor reports GAAP measures company’s reports

as team into I on want focus Mistras' the as busy I Before Groups partnering months. the various bright the I as a be Mistras. labs. board I studying visiting quarter that I and level with been in believe be what excited forward looking a been now business business. giving very I give to with and see will throughout well fourth moving senior two very Jon, to for energy, having passion and CFO Dennis financial of have extremely the a forward and to Sotirios on summary board, am for future pleased been board have entire update, brief leadership

quarter. XX% digit year, positive prior Now to growth Segment results more Revenues quarter prior than back fourth Services $XXX.X high Dennis mid-single to revenues higher a little the coupled single year’s getting were grew organic fourth of with that prior the XX% decreased this acquisition attributable digit reductions for summarized. detail in QX, in Airframe QX was U.K. XXXX the million, the XX% Germany achieved in compared are growth decline Germany. benefit the in over volume and Segment This production rise International to driven in XXXX challenged continued however year. and sales with revenues volumes was growth. This by weakness would expected despite region.

should We are in is further the Systems Products for in QX to due commencement in outlook segment our segment the XXXX. on will and also changes revenue results the further in recent and elaborate work increased which expecting XXXX. year. growing I gains I discuss France Backlog Safran when X% prior over improve of operational

a increase XXXX revenue U.K. provisioning to an an of out was On a in $X of to million in quarter a the which System by related QX cost profit was in increase number basis special U.K. diluted prior reduced year, XX, per have by with a to share. mentioned the underperforming the income breakeven closed gross reserve one, experienced was by for and including contract. QX, restructuring number severance income segment XXXX income, pertaining which on of net, or XXXX XXX,XXX $X.X and a essentially operating points terms share. impact items tax. Services by consolidated $X.X million following an resulted of the net operating $X.X of million which the XXX,XXX was XXX,XXX XX.X% of the loss in margin per In year-over-year $XX.X The the which previously net compared expense the Act income December million or million of reduced a in pretax resulted Act, in quarter, of of QX tax. fourth net net net income compared charge Fourth net a fully the acquisition tax fourth QX. for in fourth, items in passed million also prior $X.XX profit XXX an from income million. year of and Number Segment operating Germany Number basis, XXX%. three, increased operating The diluted following; operating or XXX,XXX or $X.X exclusive or residual of Tax reduced quarter litigation in of reductions, $X.XX the operating settlement XX.X% increase tax Product $X.X loss Tax operating Segment was which income $X.X XXX% year included and reducing due two, operating million on The to the net XX,XXX International over special small prior of declines generated income period. its impact

just or Excluding include $X.X Tax the mentioned Act, accompanying release reconciled of fourth of the the all amounts company’s been would these the in of flows reduction Act. legal million the non-GAAP all which total $X.XX special income XXXX. quarter accrued on year impact specific tax impact [ph] for paid Both a our the for cash items the $XX.X inclusive I than net the million million, have our quarter diluted fourth share per of of prior that in the EBITDA the again, period. free of million reconciliation was the net Tax in earnings XX% the were and or of XXXX, items, as Operating for included full year XXXX in while million. $XX.X were flow XXXX $X.X settlement million amounts higher was $XX.X which $XX.X for cash Adjusted

to West cash was Penn at net related of million December a XXXX. the $X flows capital increase of we We In obligations XXXX. contract to commenced added in XXXX in funding debt buildout, net included Acquisition which addition, expenditures, Safran to $XXX lease was operations as due Total December cash QX, impact million primarily free debt of which the refer completed which capital net the to and debt XX, XXXX. in our

from increased $XXX September Assets are net XXXX as to million. debt million of $XX XX,

flows and XXXX. will on this other additional in time, performance our stock earlier planning cash repurchase stock I expectations to and are repurchases. specific At in with used a free discussion Our acquisitions brief XXXX $XX.X partially market company not conclude million completed we items. of were fund

foreseeable XXXX, Inclusive for that and spend for Information XXXX, for this first a our over by XXX gas operating to results services Segment that Services the to XX% margins assumptions from this approximately from customer be second January million present obtained improve event, their will planning and X% increase spending beneficial made that exchange in by increase the Regarding to prices of of are are We and in customers for causing improve quarter business and discontinue XXXX XXXX, been oil and that the expected of continue mix expected a a of announced services are driven XXXX revenues to our of relatively impact cost of gas we to oil approximately by plans planning. our North Segment weaker petroleum points $XXX.X to revenues segment services expect inspection a in from improved XX% approximate the levels customers half by organic instead X% XXXX. foreign using XXXX persist will U.S. International we dollar. stable. reductions and range guidance by American large of the had reflect beginning in driven suggest in XXXX. expect expected benefit growth in to we dynamic. basis our to future our

XXXX are expected We of and more Products beneficial Total which points expected be to XXXX to $XX between are expected million. operating company’s assessing call million. rate impact of organizational revenues the increase in increase driven held XX% The for million. impact the to and its company has and operating between sale. Act to cash in the is XXXX. to XX is of million XXXX, million. over growth impact over offset are is in XX in by increase that will will $XXX Systems and expects to decline for to margins more And by International basis expenditures contract XXX to are The for are million than the Reform still expected to than between Company expected commenced the $X somewhat growth effective positive XXXX. EBITDA the expected a organic Segment expecting of approximate recent production. is the related million France that revenues by turn The a by Segment as on sale $XXX expected tax Safran made XX% $XX subsidiary million expected flow organic to I Capital revenues the with Dennis. that, back efficiencies $XX be Tax company’s

Dennis Bertolotti

reduction. common Throughout Ed. on a the in things; you, our investment and cost repositioning, our ongoing I’ll our structure level each three Thank accountability, focus, at segments. of execution. These XXXX, and of remain initiatives. and We provide on brief increase have ownership, leadership focused speed update we actions actions organize and corporate

we have each four leader, in driving contracts regions our new and within the in firmly has to the we I enabled addition others segment level, three still actively running within segment, four company of Jon results momentum reasons, evergreen greater of positive Although now our won still us searching for are the and At our degree. as having sales and services region. pursuing entrenched fourth out improved are the in a

We are on future also this ways our our are innovating we’ll international and have field deliver new calls. momentum. in more effectively Results developing to more the segment discussion good busy in services

Safran has and year. operation, commenced Our show Company servicing French all will growth impressive

for comp operations Germany positively the Products a in and the its the of difficult business. backlog all core comps QX, for Systems the good our expect our And year Segment with suffer year. and remainder of then U.K. in international We in to and will entered we

additional million are good are targeting and of progress unbudgeted making services We potentially process. an $XX revenues our mechanical sales we in

Regarding about each the our initiative, XXXX. acquisitions excited very we in investment made three of are we

of the to service in-house the to our aerospace the industry. a process capabilities We Phoenix expand investing mechanical are Arizona of provider, in

Penn, We aerospace company on of excited our about West are recent acquisition in-house the inspection business. focused

already the of in [ph] Mistras. at team level which at and and dollars brings than benefiting provides competence, pursuing in not have RAC but height we integrated revenue year are with identifying care onboarded are that last revenue their the professionalism least, we less actively synergies company at this and already management operations ownership has its strong doubled our of And and services rate Canada our run of into them. We mechanical are Company reputation, management millions and one team thrilled of from

that faster $X services segment solid of grow we revenues will impact XXXX. will summary, loss organic from made grow despite driven cost XXXX cost an will run progress third annual and expect market Overall, million cost our structure we we and have by rate, from a improved acquisitions. reduction. implemented reductions favorable realize we at in our in our large our rate Finally, initiative, the contract on have cost reductions, expected growth profits In

core in expect We our improve profit we of we we planned margins significantly are expect about and Mistras favorable Products France will growth are and segment starting revenue QX. levels very lower Germany Segment, the and brand, QX absolute the top coupled we with international organic from achieve from in and exchange in believe line margins profit foreign and double-digit disposition improve our commencing a by In closing, subsidiary, the our optimistic in translation Systems future. our driven growth also that And growth business. expanding but will

lines delivering, for and our growing, evolving, capably and add services reputation Our offerings. value-added is service we broaden

three-point avenues manage economic and provides is in ability conviction and on, I our have our up on and Our for in the are Segment. strategy for diversification Services and confident both our am active, and within we to strong both path cycles. down growth acquisition pipeline healthy improvement

take the We now up please questions. will call. your Liz, open

Operator

first from Our the line Baird. Justin Instructions] Robert comes of Hauke [Operator with W. question

Your line is open. now

Justin Hauke

hi morning. question. for you good taking Yes, Thank my

on you a that the going So did the one bit XQ, that of particularly in a quarter, nature expected, the international, gave last months comments you you maybe little so been bit margins seem continues you the But with continues bit question about the times couple guidance given. color so given than the couple quarter, and have some first talked sounds weakness can know obviously can updates little a the you’ve there, of in the and the just I in of is more in little what that that we’ve a like on pressured below was to give and lingering it on more costs?

Jonathan Wolk

gotten in we QX QX as had it in Hey this subsidiary U.K. impact is business question. our that, full into the for contract International recognize Justin an that and money good us. had contract lost in we of unprofitable Thanks that for offshoot became of an sort line had apparent unfortunately the morning, more of Jon.

business, in about to the result, XXXX. in we restructured to performed So last compared QX last exited have and very we’ve did profits. calls, year negative in and you the Germany the also year. of regard XXXX a us we’ll of for have said U.K. previous suffer a the caused in and QX, see business, remainder This and comps QX had that year, improvement we’re one we was in will a as Germany, subsequent Germany, improvement to that one, as confident With we and relocated, in production. couple of Germany to growth so the of line comment well organic in will product we rebound if defections And especially International, strong, in-sourced U.K. very that year in have customer

we’ll think, his as we we’ll were in well, in get once much comments, we again of and comps U.K. beyond that better ups QX have the in QX year, last comps performing have said in subsidiary And I through Germany. be performing of we’ll as QX well. in easier but easier Dennis -- So

Justin Hauke

just we allocation. where question second are. just my in Great. setting capital expectations I guess not is helpful That’s on for the

versus mentioned you’re debt in with the Is to there the reduction? XXXX? here? flow and it allocation on no Is thinking You cash process buybacks free improved XXXX quarter how Or no thought the the focused that. capital plans about do of

Dennis Bertolotti

at the growing of Yes, It’s looking We of got Dennis. we've looking pipeline. acquisition opportunity it’s believe reduction lot business, its so also keep at both. Justin, debt. we’re to a

Justin Hauke

I number does cash finalized include that to last incremental be tax reform at just the one that know or you’ve that, And benefits on the you Okay, given great. that flow this haven’t from tax point? reform, guidance the maybe will but

Edward Prajzner

This rate that very assume gave out consistent cash in is Very Ed stay flow would we for here, minor, Justin. that the outlook. we that estimate

Justin Hauke

Okay, great. there. you. I’ll Thank in. back leave Maybe it

Operator

the of Duncan comes Our Stephens. next Matt question line from with

Your now line open. is

Matt Duncan

guys. morning good Hey,

Dennis Bertolotti

Hey, Matt.

Edward Prajzner

Matt. morning, Good

Matt Duncan

to the and company. call Ed, welcome to the

First question I’ve on got just growth. organic revenue

year, seeing you to are that you mean, You the that or growth you up your the markets end that to broad-based? out seeing out broad-based side be is maybe same of at here up? all driven starting talk others? sort build-up gas this more is? And forecast that to than quarter. really fairly how pick by expected Or as fourth business this looking is -- do thing across are you about for I more look year in of this continue oil be the to standing his some perk head Can and

Dennis Bertolotti

agree Dennis. it’s with I Matt, you.

of lot weather Geographically, on the I because they're think think their gas, else a operate to most still while doing in, and it’s more who’s spending, there’s power part start. process well. and commitments early primarily we wind businesses, I – and and the Q especially part there to they’re do. an But all going and probably segments here that crazy what get but can comfortable for others everything differences of the aerospace, in their getting customers, oil not are little differences be trying to budgeting are and early on

So all chemical, doing for oil, seem on be of what are pretty XXXX. gas, comfortable customers they our to power,

Matt Duncan

it. Appreciate That helps. Okay.

that back you points changed for since time EBITDA believe get guide January? you’re expecting On expansion points at looks this I XXX or January your What's would this now. the of guide to the basis has It of basis like XXX more said going of about expansion EBITDA guys year, margin midpoint year. it you

Jonathan Wolk

Jon. that, is take I’ll This Matt.

the have of despite We as use we cost our feel budgeting impact refined that reductions confident the become have the more segment somebody very contract. more outlook the just large – in I absent QX. just think good organic else growth to customer choosing we’ve that will that services customer cycle we’ve made for as and effective about the

Matt Duncan

Okay.

of other basis So from point that how of margin gross that leverage? expecting versus operating come XXX when I expense guys look you to at expansion, much

Jonathan Wolk

expenses, of line. the the there’ll but some more more be That’s it's from course cost the Operating impact of margin gross line. margin reductions gross at

Matt Duncan

international you And miss be? of Okay. the think I flow the thing on may have were guys the what comment in because the last to just international saying, you Dennis, first clarify of quarter. kind expect I to to the

Edward Prajzner

international. a QX for be tougher would believe and second, quarter be the fourth bit favorable international. will comp little third for We

Matt Duncan

Okay.

really. year So specific when in to look a I comp piece QX you had business QX of strong back that this Is last can't last that there year wasn't you year. that all

it full down be XX% year-over-year expecting you to grow year? rate not or the are much just So, as as for maybe that

Jonathan Wolk

year’s quarter. the Matt, international first had very kind pretty year first of mean, last quarters of was profitable, good it’s we in that a off. Germany I In subsequent Jon. fell U.K. was quarter, strong last

year picking growing within half the and the So XXXX. last a the timing the of of Germany comparatively year as goes up was In we’re first so work the we of international course, fall see sequentially of in side. momentum of also continuation sort and the and on services,

spending I the the America for really States a and really year within we think was the in the oil doldrums in and saw North fall. gas pickup and about United in

but for be first in quarter comparing it'll of think a internationally services a against, comp that we’re comp I XXXX tougher comp. So, weak XXXX,

Matt Duncan

guys. Appreciate it, right. All Thanks. Okay.

Jonathan Wolk

Thank you.

Operator

with the Edward question next Our of Sidoti & from Company. line comes Marshall

line Your now open. is

Edward Marshall

sure Hey, curious, Dennis hello listening, you I’m to you’re and Jon. I’m too.

Jonathan Wolk

Thank you.

Edward Marshall

some improvement you little Kind of just get corral the about I I’m of the just can unprofitable kind the start drag margin show maybe how to I'm XXXX maybe of it lot We’ll And XXXX EBIT next and a trying there? that. was meaningful in year. how particular contract in bit. and what wanted curious. to about in get was its to that I at, talk the kind like with looked quarter. you business international a large What like talk look you want understand

Jonathan Wolk

swing million expected contract to in the maybe having of a X but All is right. X of had couple for million that It’s unprofitable loss an The let’s maybe pounds thanks instead couple U.K. profit profit loss. was And of say delta segment’s million problem it Jon. pounds to so a it was the the pounds, from closer revenue, question. Ed, to impact. from which loss equivalent, results, meaningful U.S. dollar million, was $X to probably a was

bitter disappointment us but to particularly for bitter last a impact So and half pill swallow year in second most us QX. then really or decidedly QX more it the in

Edward Marshall

Got it.

of regardless the kind that guide at as is so mean, And of comps the embedded that still Safran to of I was of the businesses? pass thinking And should kind the you shift QX, how start look the just about? I we Is aerospace talked XXX basis times. I majority into points. a mean, really be few about

Jonathan Wolk

It's things. a couple

You got growth to prime Safran contract our online be in right profitable coming there that's and organic the sector. going

that's thing. So one

going from comp you’re a negative year-over-year comp got, a You’ve positive to in U.K. the

growth Germany as pick and up. with has got organic picking You’ve up said some Dennis there beyond QX

did combination we a three, all reductions there. some plus it’s cost think I of So

factors. So four I it's think really all

Dennis Bertolotti

Dennis. it’s Ed,

we’re I Additional understanding to what utilization is trying think time and lot of international. nuances more doing the spend a

in So past. the we’re try bit and us that to to going front it of we in the get to surprises have prevent want

catch so does the time, anything that this feeling if us some hope have something and happening happen. all markets that in we caught with is controls and again, This something us, we’ll visibility put earlier. eliminate better like we’re that coming and comfortable working contract we're – better more only shouldn't we’re behind lot to on but so we’ll So get not we

Edward Marshall

the services to you trying to of there services little is Is more business that maybe well. And that challenging forward? focus at -- going more a internally. bit I’m trends get how there the makes margin as to just something international that look and a sense it kind I it to on below versus mean the unique maybe

Dennis Bertolotti

couple understand people Yes. can’t quicker have businesses, trying utilization, in necessary the more can It’s which the the what’s all that better. they in pay lot them. smaller to how coming do have and front them there, a in of we not, operate if is is so busy we’re it's market services of it model time flex it. to so of U.S. the regardless him or One up fact to we at to they're makes a down that much things. labor workforce be they to with where understand why work And to And that

numbers guidance on So do and think their look get I oversight at job putting them, help we I and better better to think forecasting, us can there.

Jonathan Wolk

This is Yes. Jon.

Just agree to everything in U.S. said, but did. in add Dennis addition a businesses that. obviously on than had to margin I international with operating higher XXXX

behind. So necessarily not always to lag going it’s

Edward Marshall

Got it.

Is we you move margins. run of that of into the back same that I for guys work is between, West there I’m services as I services, West functional so the I as million, differences the And and customer revenues Penn XXXX? XXXX, structural in say, how that about And getting does international margins mean, and kind XXXX looking the guide into are $XX of profitable think X to domestically. that guess When the disruption rate, below of business million kind you $XX peak the at thing, of kind or Penn kind well?

Dennis Bertolotti

There we in us lot market there. We a market Penn, which a is West potential for is us. did array. richer think growth really was itself for some aerospace in the of one Arizona

it's to. We’re it’s not acquisition as as of need doing as we forceful believe We’ve very just for a in particularly it. market one we on good strong it We been focus haven't aerospace, location, in been a and us. lot just so

that more market. energy lot putting We’re into

of do we for a us. market. we few lot room also it quite a a it's years growing see to more believe It's of there, so So got grow with commercial in growth

Jonathan Wolk

Yes.

revenues the The got margins so the on. that its on dynamics contract lower our thing, going than of is you’ve both typical other Jon, exit The of customer. be from contract margins, large that were we’ll sort losing

Edward Marshall

areas you Got on to it. a acquisitions you you that that's initiative, mean, spend I And and what talk bolt growth other Mistras? targeting capital, earlier you or look is lot this you're throughout and call for are about aerospace good as know is a aerospace a mention there of think we kind

Dennis Bertolotti

mechanical. look I primarily, we -- looking we’re at at Ed, mean, three

We’re pipeline. looking at

say We’re aerospace. would I looking at aerospace. is? lot It If focus is where more our

for So the mechanicals And and or -- another complaint to power but all gas. mechanical us chemical growth and aerospace because segment oil big three. and to to

got for has legs mechanical So well. us as some

Edward Marshall

conversations And are having me, looks tariffs, that commodity initial your relates to how of cost cost more play I the a the and your as tariffs. of final that just customers kind relates do, some exposures like we conversations, don’t one – your might point based on pipeline direct as of just with from And to move into have it in reference customers guide? forward recent of it. Keystone you're I higher tariffs mean, does you of kind Got $XXX XXXX? but What as kind it million

Dennis Bertolotti

I’ll it’s seen really customers early changes level really but you Ed, truth. discussing our their It’s Dennis. inside might approaching like, They be as tell at else. any us it we as on us own or far looks or any too budgets have thoughts. haven't the for anything rooms to anything what

Edward Prajzner

Appreciate guys. it. Thanks

Dennis Bertolotti

Ed. Thanks

Operator

Genuity. Burleson Our from the comes next with question line Bobby Canaccord of

line open. is Your now

Bobby Burleson

Hi. Good morning.

Dennis Bertolotti

Bobby. morning, Good

Bobby Burleson

aggressive. seeing pricing? It’s got pretty to an touch fee you're could of competitor. in what you update been Just get curious pricing I irrational, there maybe environment, want a on on you’ve key terms competitively pretty

Dennis Bertolotti

movement way It’s there’s help, really we’re Anytime Dennis. our issue. and we've there still seen believe just and doesn't own enough room to major find our out way plotting what but been Bobby, growing do we the we've a haven't irrational that become own it’s market and certainly doing. we got is

Bobby Burleson

major real issue no but guys? for change So, a there, not you

Dennis Bertolotti

pulling everyone's the everyone’s their when plan. better certainly in It’s own same but got direction, Yes.

our plan. sticking We’re to still

reason change a areas where more it. a are than some to you Geographically areas. lot see other We that haven’t found there

problem becomes been the a hasn’t it sometimes across North market all. So American but at it’s overall issue of entire really an much

Bobby Burleson

outlook. And margin then of sounds there the area it seeing that’s Wondering how terms your some M&A. progress in mechanical, with an is potential progress like you’re and focus

that’s operating that that So thought does of out it sounds wanted you that NDT, that ultimately higher could Any your there? evolution evidence to? be playing the way margins any

Dennis Bertolotti

plays component. really They’re them. adds for and for ways into having a better money that their it the savings safety on to value by it’s for vendors growth less Certainly again. are to it Dennis find the less working because the Yes, customers market people Less to looking trying us, and save side around, for.

to a least where see it’s are we be equivalent margins, at we to either We The think as to So going of the NDT. we’re your side where don’t growth. at. points lot delta it for a its

everything else us we at. all the be our for much two we least the know hooking and up. we markets of hurt those also in it so power, So will for potential just in at see work more margins gas But won't where

Jonathan Wolk

a frankly Bobby, or it’s just Jon. I’ll add as to lower higher be to said that we our there's margins. potential quite that say, is and Dennis recognize NDT than

we be going on type this lot And based business of to of so we a make to the is the choices and pursue. choose

NDT pursuing is as we’re which been We very of trying adjacent discipline. just the Dennis business and to we’re will to careful maintain that we’ve So type said. about we think

get to we’re We’re from at. out good not what looking away

And and we’re fine. will we that because for be the so being margins just reason think choosy

Bobby Burleson

the you end in you then, on And and uptick little see you hearing tax -- other markets early what in are whether in oil impact, the benefit, any in guys Okay, to tariffs its gas the too expected where wise a kind CapEx North terms here an benefit or on do America in of capital understand your state spending? not customers what know might reform wondering I of terms potential of great. but

Dennis Bertolotti

Dennis. Bobby, Yes. it’s

customer they per haven’t for but their we I have we they’re all high adding waiver in given were XXXX we positive to yet. what on for Our them because conversations, the numbers they're know to talking doing, for seem what very just benefit I confidence a XXXX. what se they're strong know fairly believe have what seeing downwards plans, trickle solid what if if we’re and about they’re don't seeing in its confidence planning. made from don’t

Bobby Burleson

the in had conversations customer’s since say has you’ve at your you reform was that tax would And confidence all pushed back? increased

Dennis Bertolotti

there, all shop spend, investment so else to because mean, going that be they're their still growth doing or them any for of to commitments even and wavering aerospace customers. Act we do Yes. of lot gotten that the there or less I But they’re Tax hasn’t outages that of sure. side hasn't their the heard there’s haven't speaking to anything it to in seems Again, anything been their positive. more.

Bobby Burleson

Okay, great. Thank you.

Dennis Bertolotti

Bobby. Thanks,

Operator

Instructions] of [Operator Capital Markets. the KeyBanc line from comes Our with question next Afzal Tahira

open. line now is Your

Unidentified Analyst

gentlemen. Hi, This for is Shawn Tahira today. [ph] on

one gas and us is the from First just a level oil high question side. on

guys view term taking are and rate of differed to longer curious around? the planning few over years account wondering you kind what We’re activity last oil for the you’re prices extend longer the guys, just about term gas into some sort thinking growth you to just and just stable. get oil remain maintenance and from How of

Jonathan Wolk

for Thanks Jon. the Its Hi. question.

the of spending we’re been and coming I general get pretty starting about optimistic, back in for downturn significant come back a cautiously has It's mean, that that pretty really really is and patterns measure. we’re deep I I guidance was sense to our this which that feeling a industry things year hard to good why think through whole think are organically.

I this I of have I levels alluded you think think the assumption but that increase I prices, assuming likely to is of range slightly considering level somewhat, widely think price today's our be that forward. that planning you future, positive wouldn’t to predictions that think but maintenance oil in and double-digit are but certainly for ranges range spending going a in deferred oil

Unidentified Analyst

exiting here, could more we’re into obviously to just to rate? pulled reflected the the expansion XXXX terms there margins, we wondering Just in of in I’m full Thanks. potential incremental trying internally? then margin sense moving some outlook be are over is that nice some of margin get leverage from Or XXXX come XXXX? Okay. kind at And just some expansion the as run can margin where a of

Dennis Bertolotti

it’s Dennis. Shawn, opportunity for believe still We have we growth.

can and better. performance We can get eliminate surprises. Our execution

we’re the mechanical. but oil and with mechanical and industries within covering on industries those more types the only segments of types only focus the not of gas aerospace, not that Our

help strategy the margins to on revenue, its think I on to well. that do to we us got think the the but going our is as not much I ability sharpen better going

of ourselves a to make So we we stand yet out. lot room still believe got

Unidentified Analyst

Excellent. time. Thanks very much for your

Dennis Bertolotti

you. Thank

Operator

queue no Bertolotti Mr. like I’d time. this turn to at back remarks. further in the to questions closing showing call for I’m any

Dennis Bertolotti

everyone’s time safe everyone appreciate wish Thank today a and attention We’d happy and day. you. and Okay.

Mistras (MG) 13 Mar 182017 Q4 Earnings call transcript