MG - Earnings call transcript Q1 2018

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 the First Quarter ended March 31, 2018. My name is Shannon, and I will be your event manager today. [Operator Instructions] Participating on the call from Mistras Group will be Dennis Bertolotti, the Company's President and Chief Executive Officer; and Ed Prajzner, Senior 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

from was and Group's On first consolidated financial March XXXX. Shannon, will call quarter XX%, approximately up revenues Income respectively, morning from year we year generated performance XX, Mistras over million as prior income of operations. net solid over adjusted review EBITDA results It prior and good XX% you, XX% increased quarter $X cash up and today's everyone. well. we operations XX% and ended for Thank the very with a for and the

basis of Our improvement driven an all-time operating prior margin ratio. led income to impact improved $X.X leverage even acquisitions. positive exchange by record revenues operating services operating with revenue our QX revenue million the due a special a points. Services, increased XXX point International over the XXX XX% translation XX%, segment a basis overall This largest foreign basis Services increase operating segment, segment, by and points, the reflecting year. XXX or excluding all was expense strong for our by operating items in increased improvement XX% margin income The increased rates. by favorable XXXX after before efficiencies. Services

operating segment’s loss sequentially from in year-on-year income an this expected, decline As operating QX, a had but improve XXXX.

that the Although QX actions was during and undertook we corner segment, turn benefit a the will the have for difficult improvement we comparison XXXX. we from many international

are profitably, this the and prior Mistras and XXXk the cyclical loss. ability market over dynamic Our its and The operating the Products revenues by challenges. through improving and improved gas manage segment. & operating prior profit over for Systems operate oil demonstrated XX% outlook year, despite segment has to increased year’s the backlog

business sound and gained is Our momentum.

our QX detail will through share update now as on financial summarize our as going results, improves. expectations reiterating for and will and us this help the outlook is value demonstrated in for as the will initiatives take I gain focus QX us forward. Afterwards, market expanding delivering our and our market by As Ed our well XXXX.

Edward Prajzner

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

actual translation This coupled with $XX.X to Dennis million the an Some QX measures was expansion. prepared factors company’s earlier. exchange the of high mentioned million, foreign for are a increase segment with rates. $XX.X available compared revenue on attributable single-digit report to this to This to US that website in of differ from current the on $XXX.X for million, certain revenues website. the X-K, reports contained US financial one. $XXX.X to Services of financial GAAP. and in comparable be XX-K in the growth quarter supports mid-single-digit those QX most Form to that could file most Investors sections and a of XX% on $XXX.X QX found Consolidated cause with XX% million, GAAP The in increase than SEC. or XXXX on year press and GAAP financial higher the directly measures results year-over-year, grew Annual in Reconciliations million up segment prior revenues related SECs non-US in the can X% the discussed our conference record acquisition tables were were other of was QX those segment, accordance Form organic Report yesterday’s discussion not will release were call International company’s measures year-over-year. include are recent attributable favorable as the decrease

improved over from Germany [Products foreign well segments XXXX. rates. driven in & operational revenues QX changes XX% organic and results in as increases the gains as improve year. in and We segment (sic) increased throughout Systems] has Backlog should Products in expect by further translation XXXX, recent exchange driven France & prior

In operating $X.X million segments from million X.X%, prior to its year, inclusive in increased of approximately by the favorability the as non-GAAP X.X% to income operating of $XX.X margin operating QX XX% year-on-year income, Services $X from compared items. to terms from million of income increased

Excluding such operating QX million income items margin million income before basis XXX period. items, special in Services to points. $X of year segment generated operating $X prior increased The international the segment in by approximately compared

cash the cash per the fully prior were million March of debt of obligations, we subsequent compared $X.X refer in at $XX.X which and quarter timing and debt period, net remainder receivable. EBITDA was operations & for in million with in the basis per compared QX income as compared million the basis On of flow mentioned the from compared approximately margin primarily income increased was XX% cash with expect $X.X This operating $X.X by earlier, we Adjusted accounts XX, improvement, this from million diluted are points attributable was income optimistic significant Total for Systems improving consolidated comparison was year XXXX. QX, million prior $XXX,XXX of equivalents, favorable year million to period. compared year. an we the first $X.X cash will This operations prior a year-over-year. million to on loss quarters for Products net As for segment Dennis a anticipate million realize was $XXX the to of and flows collections XXXX. income increase year. likewise $X.XX XXX prior $X.X $XX.X share, to in fully lease share for $XXX,XXX a XXXX. segment. Operating was to in decline prior XX%. capital or this improved or $X.XX diluted year. the We $XX.X QX to million net

update million was $X Our in net by the with QX borrowings fully that on did nearly expect Again, increased our for have same conclude guidance, debt we amount, we cash our earlier. anomaly down flow hand guidance not during by approximately specified items established cash an previously but will $X and reiterating approximately XXXX. to our increased million. during and expanding an our pay QX, in I

will petroleum for services are customers, future, customers North be from the prices dynamic. are that suggests obtained We our gas oil in range XXXX, expected they over XXXX increased American to continue to inspection foreseeable our to Information gas persist expect for and oil relatively and and spend spending stable. somewhat that for the present or this causing reflect results

will back $X.XX. Accordingly, to is be over $XX be that, $XX million. an and income million and initial XX% to our effective XXXX The million to EBITDA net best $XX Act cash impact operating expenditures estimates is the be commencing that are disclosed, expense to as to for and using its XX% discrete to company the rate for specifically the expected of revenues tax call chose the between $XX a share we large is million expected expects flow company any that Reform beginning $XXX earnings within However, $XX between to will items. and XXXX, customer between realize of services between previously $X.XX XXXX expected offsetting $XXX QX. and company discontinue the services between Total assessment of be turn with will from approximately $XX Tax per to will I guidance The million. using The million. million to Capital exclusive Company’s available and are And Dennis. completed $XX million. expected its million approximately be be segment diluted

Dennis Bertolotti

Thank providing update and our initiatives our brief outlook. you, on up I'll wrap positive Ed. by ongoing a market summarize

projects and mechanical particularly segment services, level much the in During aerospace. Compared turnarounds and and are oil in healthier. first strong activity gas, we quarter, for ago, experiencing the market year that we services with one were feels of

season, relatively of referrals. thought XXXX seem to at to Is we some work a of level normal. a season compared be should a what fall up we we back a up fall this definitely demand experiencing starting was see this As year suggest with from and which indications catch prior was that on time, those there deferred normal to pent come a turnaround spring. Early

first but entire a quite comparable In So year-on-year a to in and return compared are started perhaps North levels. year that market already had and second half our expectations been not the has oil the week for year strong for positive the American to calendar spring with comparables gas prior normal quite to fall, comparison. that are year favorable, half relation prior as with robust

development well has is & activities our revenues, research some leader, plan have we we last progressing installed Systems exciting summer. along increased The under and orders segment and Products important with customers. ongoing new QX sales Our which of unfilled and with some backlog

underway infrastructure have the promising on also We sales several cycles side.

earnings to marketing and the have actively and are product next call. within a progress an segment on We system help update on this subsidiary our

more But improvement Our with QX International year had weak through for admittedly importantly, poise growth from sequential year’s quarter. against strong compared prior prior this the comparable fourth QX. segment

oil in power well been doing have We the and share in gas, gaining extremely and generation France, markets. market

that aerospace starting built some also Our late their and traction, suppliers and support gain lab primarily as well. Saffron is commenced Saffron to but to year not operations serving of last only was real other

will noticeable to quarters Our very come. continued be ramp-up the in

be protection improvement launched is our we growth XXXX solutions two deliver German society’s a to rebounded, from on despite service we UK grow to needs asset updating digital by our we maximize that cost the way. reductions, our have using our QX. are impact creatively initiatives the Our We��ve looking day, business provider on which picking faster times. we’ll prior rate segment on Every the and our organic better customers on solve Both recently significant and business customers’ during solutions will revenue is by at to acquisitions. improve asset initiatives profits exciting market these has improve and continue to corporate-wide at improving will developing, side activity In and needs. in XXXX, the the I piloting integrating economical To compared protection loss seek expected to driven sent, forward be turnaround up involve in spring grow and we’ll with value from a executing meet in the to integrated with our our call. working favorable actively you summary, to then expect an year. to contract, unmet we productivity off will we vision, initiatives large and continually field the technology

organic we by with QX. achieve coupled in We margins driven growth International foreign & profit our in Products topline, significantly double-digit commencing will And expect Systems and segment, will favorable improve Germany, improved and segment exchange our value-added brand expect and margins France from add translation, broaden its for in closing, our delivering, future, growing, our reputation Mistras we we very and capably a is growth lines are we evolving service and are the expanding offerings. four yes, believe business. services optimistic In about we our

up growth. and have diversification pipeline confident new in believe momentum and XXXX, down acquisition healthy maintaining for are up are I’m Our through active We past for will and the manage successive improvement the drivers provides built we avenues strategy strong positive to in quarters. economic macro-level and be our and confident cycles. both few the forward in on, is and and over in economic conviction we we our both that vision ability path

will now your open questions. lines. the please We Operator, phone take

Operator

Thank Instructions] you. [Operator

Edward Prajzner

Thank you, operator. Hello, this is Ed again. Prajzner

to questions, on point out go just wanted stated. comments that the your we and in an press to our I error I release Before

made Specifically, not and certain net EBITDA fully adjusted stock figures deducting a guidance We diluted EPS. from incorrect. for are at inadvertently expense by income mathematical our arriving error in compensation in XXXX

$XX in our $X.XX. income fully million XXXX million be $X.XX correct to guidance be as to should EBITDA range is to $XX $XX at million $XX should our net diluted million, stated our and EPS adjusted range but Our

amounts. a Operator, file question. first guidance our to Form shortly with please very X-K will the We proceed corrected

Operator

Company. Our with comes Sidoti Edward Marshall first question from &

You may begin.

Edward Marshall

Dennis, Ed, how are you?

Dennis Bertolotti

morning. Good

Edward Prajzner

morning, Ed. Good

Edward Marshall

million curious year. on more what's math. on adjusted leverage cadence me revenue you you the finding the just kind update the to but did $XX seasonality expense in I'm of Penn to the West remainder that the margin margins services – $X in what the there. the margin of operating gross went million a of mean QX, quarter, I down. West to from basis a how up is year. and the to I'm The the a gross the sense how just on lower, the between maybe just line. higher ramps revenue that the get sense to understand with the business lot as it talk trying know I get sense I I makes looks of wanted about in Penn has kind effects through a good job anticipate trying to like for

Jonathan Wolk

of to you rate that one start. quarter I'll in schedules as Ed, we those work we we gross-margin we is turned generally And and sales in benefit the won't the morning. year lower place. the half take sales the expected your so to first mix. but I estimate. End earn is good given what comment mix it revenues. stronger had bit forth -- of way lower margin the that would type geographical of in were the a just the alluded But sales say in the there's to as out, than Jon. on activity Penn a tend service I This West that just specifically little speaking, seasonality segment, the in some from the of and has that business. to, some a little tend bit a first Services That's

going it's of at feel don't profile forward expectation. we So our and margin about outside the not all adversely

Edward Marshall

Got and then trend to lower kind of was new orders that margin. was with looking more to now Is is see that it previously margins incoming processes? do them And the It. Or it Thanks. of revenue seasonality? kind on you at captured back historic thought

Dennis Bertolotti

mix contracts did which on we of more seasonality them. and just more It’s work the

Edward Marshall

like for you'd of as maybe for guide a that get we I can provide specific that have the which might spring, to look you, a as spring Got been entirely own any strong sense for anything XQ guys? that top the as almost at season. guess, for for sense there from purposes perspective it. specifically how you And line turnaround you through Is where to the kind

Jonathan Wolk

about, QX We feel comments good Jon Dennis about good said as in feel in spring again. We -- really general. about the his – and

the going our all to was be For across really quarter QX, like feel and month. April a strong, is it's going of really be entire good strong We to segments.

it. very about feel good we So

Edward Marshall

importantly, season I'm I've I’m first, how that fully you staffed the into labor about And from curious, commentary coming heard you that fall. for you’re for wage you you pretty in kind of looking the lot if companies earnings revenue about It. the about and of more inflations creeping cost. Got industrial then And guys, model? a a you bullish had what see outlook labor, this are curious finding And

Jonathan Wolk

again sure Jon It’s and chime will in. I’m Dennis

We’re terms little it’s a We and bit staffing, tend bit additional flow there starting folks. manageable. staff but labor in in is general of to to our And in inflation the seasonally. ebb staffing. see tend little certain a to We of geographies, steady an some up to supplement crew with

bench waiting So it’s the not in like fool. sitting you’ve the summer time for got people on

pretty I we the present we’re So at think feel time. good how staffed about

Dennis Bertolotti

is this Dennis. Ed,

for serious not with of I a good the capture going we’re balance that forward We inside little that some have for you because is spring. too at tighter, seasonality no, pretty feel talking industrials want overly this a couple We able we to because not fall top the to did workload. our you at the the to you now. again in industry of all. that just balance where your we be at right like their business heard we see labor us dollars started want of know there we bulk many tightly missed actually about the last, the what’s surprises. workload in heavy we’re the no said, have feel always our labor a is coming But have Like means of it’s like point always but The bit

Edward Marshall

Got I appreciate very the much. Thanks comments, it. guys.

Operator

KeyBanc. comes Instructions] from [Operator Our Afzal you with question Tahira Thank next

You may begin.

Tahira Afzal

some congrats. the regards folks, question you in and Hi, for. that guess margin of gave the I guidance first Decent to quarter. is

as on a as point miss the under the points year to that basis Are points? I for pretty did international improvement And you margin notable But goal. basis intact in the sorry, XXX XXX those well. first margins if and services around to still

Jonathan Wolk

margin the accretion intact. its different feel in Tahira, intact. yes, segments reasons. for definitely have do Jon. segment But and we, We about feel all good again are there that each it’s will We

Tahira Afzal

reason you it, fiscal XXXX there in them. It okay. by this setting your is should given that not remain also guys as your pretty traction And I Got have seem taken full continue into like lookout. that year momentum initiatives as is any then And you the know well? does conservative why But fiscal appropriately fact XXXX always should well?

Dennis Bertolotti

it’s Tahira, Dennis.

this Our the gone. are customers budget oil is point, concern. volatility the good through believe At of out. XXXX market, set and there. us, and power side point see energy only And The far aerospace got the but XXXX out unless than came I’d at any keep the and we reason think any to probably look that for I that this mean, full at year. going I everything should growing. we’ve going good. say a don’t We prices would XXXX on trying are normal for better predict the would something

it, we’re yet. get long feel we on but into and So, still past our hands fall the good XXXX try about

Operator

no like Thank Dennis I’m to this closing you. back at turn questions for showing further currently Bertolotti the remarks. I to over call And the time. would

Dennis Bertolotti

to We’ll today. day. like to Thank to Okay. call on to look talking thank you and everyone forward everyone like listening a We’d and for the thank everybody, I’d quarterly productive And our interest. for your next like wish safe to call.

Operator

conference. today’s and Ladies And for a have gentlemen, conference. your Thanks concludes this participation.

Mistras (MG) 8 May 182018 Q1 Earnings call transcript