MG - Earnings call transcript Q2 2019

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Operator

Good morning, ladies and gentlemen. My name is Daniel and I'll be your event manager today. We'll be accepting questions after management's prepared remarks. I'll now pass the call over to MISTRAS Group Director of Marketing Communications. One moment while we connect.

Nestor Makarigakis

Group for MISTRAS of second the XXXX. to conference its call quarter Welcome Nestor name Makarigakis. My is the for Ed on and Chief President President, Participating Operating call Financial Jon and the Dennis Chief Vice Chief company's Wolk, Bertolotti, Officer. Senior Executive President and Officer; Officer Prajzner, Executive Vice MISTRAS Senior Treasurer; will and be

those I remind everyone results conference forward-looking include will company's want that actual this to statements. differ could projected. from materially call remarks made The during

cause and actual the SEC. can to filed Some differ annual in of that those the discussed results company's report are factors with on other recent most Form XX-K reports

financial The discussion directly comparable to GAAP measures accordance and financial prepared in the financial in certain US in company's found release be Form press measure contained conference in GAAP X-K. this current with tables US also the of in related measures include were on yesterday's Reconciliation the not will most that GAAP. can call non-US report these

the These section reports are available SEC company's website on the and the website. Relations Investor in at

turn now Dennis? Dennis Bertolotti. over to will the conference I

Dennis Bertolotti

good And Nestor. everyone. you, Thank morning,

half the today's XXXX, provide give you an first financial results well update as During remainder for for of the call, the our quarter and MISTRAS' outlook business as second on we'll performance, of year.

were significant with per cash expectations flow share, year-over-year from results the EBITDA Revenues, earning income, achieved top both solid our board quarter across the and line. and Second net to the margins, bottom improvement all sequentially. adjusted

more the comparable our making achievement a strong us, very mentioning given our worth was challenging that even quarter quarter is quarter second XXXX of It period. this for noteworthy

feel about are in we for are year. our we guidance. existing the continue we into We maintained where momentum a third our XXXX Consequently, good the fiscal outlook to reiterating quarter strong and

and up most revenues with acquisition. recent robust both growth organic ago combination a remains year X% almost contributions business underlying from expected through a from of Our our

our again once nearly Results is the services where performance were X% growth led currency market, segment in up basis, basis. in were a constant almost oil revenues constant revenue and reflected currency by organic On which X.X%. a gas strong on primarily was

get level puts us a slow on such in the overall first off Add we sector. activity, second the that in to and normalized market year full more our quarter the market to our XXXX. this for growth track half did share in recent we returned wins for of over we Although and the for anticipated solid gains very start year the confident outlook first of feel a the the quarter,

business we of With oil and to and less market nearly risk. cyclical the addition XX% Onstream continue midstream gas our the to operations segment, better balance our being of structure evergreen contracts and

While verticals. in contributor, complemented oil the by growth it and other gas was was largest

We've recently won spanning and contract. customers new monitoring products our For $X systems had instance, million of And several verticals. several wins continue global on a to also other we new basis. bid a on opportunities market bridge multiple across end

and in beyond. and Growth and West strong recent Our of to has continues aerospace our Penn the to a into be corporate had good in is XXXX. for continue continued the the XXXX acquisitions well. XXXX market perform outlook that industry objectives one

They midstream been able are was relationships. have leverage good which December also acquired we in where MISTRAS a is the in Onstream, having particularly XXXX, year. US doing to well existing

be Onstream being our larger integrity. the later recent of on tool XX-inch with We be expected is progress pillar growth achieved year. tool, XX-inch strong will and about are our pipeline this focused to commercialization of excited a overall the ready our which strategy

to margins been the quarters. pricing is undertaken last leading product from consistently expanding to discipline several have The various initiatives that have over that we divestitures

from XX.X%. point basis In trend to XX.X% this extended expansion gross we the XXX with quarter, margins second of

the initiatives One value our at XXXX. our is level to And gross our services. throughout appropriate key margins of of to this is maintain year, corporate goal remainder for this achieve

flow cash financial The in on thus is on the company in Free our basis. a minutes, half million to generated $X.X And few so has historically XXXX, a always of are through track from Ed attractive year go over strong our first also improving execution in will year-over-year of evidence detailed up far last flows far cash $XX.X our results which flow. XXXX. cash million. operations

MISTRAS maintaining steadily, for following. been our albeit ourselves become the to For view, the of future the wins on longer-term transforming focus by supplier the to somewhat we position have quietly, additional choice in

covered productivity delivering B, We productivity include solution. regardless for this protection. example of like MISTRAS is Digital A of might lastly, we a developing quantify side on entail. feedback same industry-leading tools the the to where table customer by advanced any developing this hardships promises, D, customers, IP data our technology relevant working and great them. A, we the deliver. value And innovating Radiographic as with Testing in capture drive value. meeting our innovative crawler our C,

to of our conversation gain areas Each are demand enabling customers, the differentiators, create key and change these us with share. market

industry is growing our speaks volumes this business And and strong solid product our demand as offering by our the to fostered core organically. services relationships. for excellent and Our

of anticipates recent analytics growth future predictive just our field that Onstream's software and technology-oriented growth the investing the platform are technology facility, demand build are also channels. the and more more in We're impending for Streamview data analytics. by using in a the to some tablets we preparing developing for PCMS

well strategic an our long-term is technology. complement organically that through part of existing Digital our important we're building on and vision acquisitions focused as both MISTRAS it as

with our MISTRAS Digital. for progress expected track on We're

keep expect expect are our customer customers to sites value as of ensure we the that our For up within base XXXX, the and standing from new we information program. rest getting the beta they

smart our real-time data we utilizing full creating early be tools. will benefits in be should achieved of solution In version full-time new an using early what can be XXXX, sites digital by the that

financials Ed quarter. will detailed of over I turn call the the the to now review for for a

Edward Prajzner

our Dennis' us reiterate the performance To results quarter financial have for XXXX. Dennis. in reflected year, original for outlook you, pace second comments, achieve on as to our Thank full objectives

for results the X%, consolidated closer by currency contributing constant million, revenues a nearly but due X% were at basis. on X%, to up currency growth to Organic $XXX.X approximate with X% Looking translation. acquisitions X.X% an up offset unfavorable quarter, was second to decline

increase to profit XX.X% year, compared the XXX $XX the margins significantly an quarter quarter for for gross in Consolidated gross second of was X% million, a with approximately prior quarter. improved the the Consolidated increase year-ago XX.X% points. basis over

underperforming and focused an selective service in on margin which and businesses. Margin acquisition and mix, expansion reflects disciplined pruning a operations higher favorable contracts, strategy of a turn more product reflects growth more strategy,

last second year. income to compared Operating improved million comparable with million XX% quarter for the in $XX.X the $XX.X period

our quarter remarkable. period a As making second strong Dennis quarter compare last was against, to our performance year mentioned, the more all this

per in quarter of XX%, basis. diluted XX% and up model. top are line in were substantially earnings share the second on Net was both the a leverage GAAP inherent indicative growth and our and improved income up These increases outpaced

a recorded cash on Second a reserve results customer was XXXX quarter a reserved of a included recovery in pre-tax $X.X million debt XXXX. and period bad current comprised of earlier originally in partial of related customer million to collection a a $X million reversal This basis. net $X.X

Adjusted XXXX last period of in million XX% compared the year. with the up same $XX.X $XX EBITDA quarter was to for second million

point that a growth expanded quarter revenue, As to last a demonstrates organic accretive year, for the percentage EBITDA of achievable. XX% acquisitive nearly adjusted on margin focus full is same being compared both second period to which our and

the company earlier, mentioned cash is Dennis As generator. a strong

was flow cash quarter the free Second flows per million. flow cash basis, a per activities were operating from cash share $X.X $X.XX share million for $XX.X On was quarter. and second free

the attributable working of the capital to our remainder We generation of our anticipate management. year, on renewed flow continued strengthening over cash focus

more Onstream Organic revenue by reduced services at by segments, Looking Unfavorable quarter. approximately currency revenue incrementally to translation X% second X% the revenue revenue growth. X%. in closely added and services growth grew our X% increased

pleased including West Penn margins such expand driven segment a our profit and to lower segment, strategy and key margin points continue operations of services in of improvement to of XXX see significant corporate acquisitions period XX.X%. year-ago by pruning for Margin and Onstream. growing The as operations, a the margin XX.X% quarter, we're a our generated is to expansion basis margin compared largest the higher gross

strong portion of course is significant see segment this we revenue in year. incremental are leverage sustain this current of operating significant over There with straight the operating a level we could contribution income. can confident to margins wherein one drop margins, reason at the we is This

margin International revenues due about and of with X% the from were primarily business. the rates German that unfavorable in down leasing a XX% to X% runoff year low nearly currency of ago, staff attributable the second to quarter

compared margin largely gross reported to year For due the XX.X% labor lower XX.X% quarter, second margin international a utilization. a ago, a to

$X.X to down quarter, million were XXXX. the with attributable this line was divested the revenues product in systems that in decline second and being Products largely

profit for segment prior year. about increased with XX% Gross in compared margin the at slightly XX% this

quarter, Dennis products benefit project the win may As second a and which XXXX. mentioned, the quarter $X systems during partially million fourth did of

well the up flat XXXX same of quarter in over was approximately only at quarter year. controlled the SG&A and modestly essentially prior first the very quarter with XX% second revenue, of

well MISTRAS these we with Keep assumed in Digital. as and developing despite sales the are and investment results mind achieved the making inclusion launching that as overhead ongoing marketing, in we Onstream of and with

level spending year. a that the run is full the rate confident of reasonable XXXX half are for We first

We maintain and continue our footprint overheads review to make savings growing to sure to and an we invest in company-wide efficient our for support business. rationalize

$XX.X year. the compared for prior quarter the up of prior to operating was second XX% $XX.X in second million to $XX.X million $XX.X income for was in nearly XXXX year. million the the quarter Operating compared Non-GAAP to million income

$X.XX year. per the the XXXX with per same $X.X period share share income or $X diluted quarter for last Net of million compared $X.XX or was million respectively diluted second in

diluted million per XXXX with the net $X.X or million share second quarter This was for or XX% in was Non-GAAP period. compared per diluted the non-GAAP of income a EPS. $X.X $X.XX prior share increase for $X.XX

million an last increase compared $XX.X second EBITDA year-over-year. same Adjusted for of $XX the quarter the in with was million quarter $X.X million year,

revenue, improvement the adjusted full As the a same over was second one of XX%, EBITDA in point percentage year. quarter prior nearly period

reduction in from million free of earnings, second a cash The of and working hand. better capital flows strong million on $X.X utilization to positive activities due for flow of cash XXXX, quarter and of company cash operating generated the $XX.X

net $XX by the defined million million company's was $XXX.X The to and so company cash XXXX quarter less second of million cash debt debt, December of XXXX. XX, XX, at at during debt total compared million year. $XX as June over debt, this alone reduced and has equivalents, XXXX $XXX.X down far The total paid

ratio this agreement, X.XX leverage reduce was of leverage our XXXX. fiscal XX, XXXX. is fiscal end to our early June X credit in times ratio around times and goal the leverage of defined our X below this to approximately As by as times year It in to get

expense sheet Given net our any our believe and we acquisitions. organic and selective strong cash well both is will funding debt, our as annual tuck-in of balance support interest objectives the as growth flow,

second our XX% XXXX. be was rate approximately for year. rate fiscal tax tax We effective for full Our to effective the quarter the project of XX%

that, Dennis. to with turn will I And now the back over call

Dennis Bertolotti

only into through And be anticipated some year, and the case. the Heading second which Ed. challenging activity out about year. proving beginning extending opportunities, normalized a level more the you, with Recent a the full-year quarter, organic Thank returned conviction together outlook first of with remaining our wins, had to but we the outlook. is of balance strengthened to that this quarter

remain level drivers economic positive. also Macro

million our between So, Capital year is total flow guidance up expected That $XX revenues our million. and be are in confident to of $XX million. XXXX. is $XXX be be forward Adjusted expected to we're $XXX EBITDA $XX momentum to million $XX $XX reiterating being, and between expected to are free to to full and maintaining the be expected between to million million. expenditures million are for cash

with pleased booked XXXX. very revenue in significant level we that is company the wins have The of organic

to execution, certified strong meet due We investment qualified of our personnel winning to factors, an digital a are ability staff new go-forward operating and to including requirements up with and in quickly reputation and brand, our number solid including business customer consistently systems. our this ongoing successfully

ourselves accomplish as given solutions, labor reduced differentiating through particularly on digital service expanding evolving which to of and We market, solve earlier. for mentioned needs focused our the lines customers' a I overall are project in

developing cash leading profit We tools our attractive remain market price solid to firmly of at of value also We technology. operating maintaining predictable, and enables position flow. committed add this forefront us utilizing inspection advanced to and with the proprietary generate at

exceptional an on with In superior customers our top quality their return process, we investment serve with the value. delivering results economic by

strategy the I the and short, am on and creating path, term over shareholders. long executing our MISTRAS confident mid are for value right on that we

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

Operator

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

now line is Your open.

Tahira Afzal

on Thank team, your and a you. Dennis great congrats quarter.

Dennis Bertolotti

Thanks, Tahira.

Edward Prajzner

Thanks, Tahira.

Tahira Afzal

question, first I if top essentially flat end, look this guidance, you at versus profile the revenue what guess, roughly. at it's your I top assuming line saw a quarter

sense I if revenue of the you're your So, could of love and what bottom would get to end perhaps a you being to guidance conservative. take

Edward Prajzner

asking what's You're revenue our bottom end guidance, saying? you're what of our is

Tahira Afzal

Well, the second that half. revenues bottom assume the end fall in would off

So, an scenario would get idea lead to I that? just was what trying of to

Edward Prajzner

make be what But and could only QX done, QX a we've to to thinking for There's to is coming a late have you don't track believe see believe closer spring. going time I we're up thought. Right but really be thing bottom midpoint. the we're believe the by we a way should it, our on year fall. is late midpoint. We the we possibility will got comfortably we're had The hit with trying our to close we still QX. the end, now, We we

Tahira Afzal

guess, cross next But line, to million should assuming talk low puts a of going to early some like of growth in it about be margin see EBITDA. more expansion, I in revenue a say, to seems digit to little revenue I X% % year. it's you know growth a X comfortably sort you, at that midpoint Dennis, out? what you cadence. position let's sort is mid-single $XXX

Dennis Bertolotti

or from keep Yeah, to I we about one big customer. But the million talking got the for then, the around is past. the do have somewhere it. don't the headwinds full a which like We the of full losing million And be we're German year so from million, still off million year or $XX of €XX about going fall more. $XX to manpower, the another portion $XX

close talking at that put for we're to to we've So, full got throw that's almost you behind trying you're $XX another X.X%. we're where still that us. When that the million into year,

So, you're talking high-single digits. to mid

range. closer or market. X% we talking market's beat we but we in can that. X%. believe that outperform You're Maybe believe the next are We market, year, believe We can the to year, this X% we

Tahira Afzal

really those your sharper of for arranging my – Got site How it. and visit much your digital Very helpful, Dennis? Seems you brought I question, help so, do with initial into Dennis. you as focus importance year that or yourself initiative. and thank And look think last for out team you traction the that to encouraging. expect – the has been a

Jonathan Wolk

Jon. for Hi, the It's Tahira. question. Thanks

very So, about Digital. MISTRAS we're excited

looks their fairly and just have QX a it We customer. converted same first other data our have And fleet. they to customer talking are within site – that in refineries within paying order second like to a we'll soon

to many half logistically as we number of trying this just in sites second it's a question have to of right We get year. the queue. in can up And, now, of a lined our as

look And dollars that incremental year, our accretive. will think So, we to million top expect profile the to be in I we to pretty margin next be revenues several line. as there's out

Tahira Afzal

Got it.

Jon. Very Okay, in hop I And back the will helpful. queue.

Dennis Bertolotti

Thanks seeing Tahira. coming the Thanks, for and site. on

Operator

America. you. question next Andrew And Obin our comes with of Bank Thank from

line now Your open. is

David Ridley-Lane

activity bidding of has on XQ? oil Thank how gas for the sector and in Wondering been you. Obin. Ridley-Lane the This David Andrew is outside

Dennis Bertolotti

what like, meaning saying? activity, year will Bidding the the look are you of rest

David Ridley-Lane

and are any from you clients. hesitation New just deal wins seeing your if

Dennis Bertolotti

strong. I would by out If break that's it I been – say, were to aerospace,

on And for on still coming out, power We don't the but In go power any sector, more those the is deflection, lot haven't wind. sector seeing us, a things while we're far seen as of based the programs. are annualized bids in. those

– -- little expect it's have the the to haven't So, kind of that traditional market market's I a provider. been some of be gains, their coming we to But than it's strong the well. just where in And coming deflect us. here a But a differences for bit and of strong looking strong. stability the more those in a to getting would bids customers so back going think, of early fall share US fossil anything portion seen spring reflection that's we'd be wins for inside and in the that But power. nuclear for of as it's And in. much we

David Ridley-Lane

your Understood. risk labor field wage rates for And pressure market – margin you any the you. is then, change in wage in down seen goals? a the continued the tightness tick in any on pressure Thank and staff inflation on here for US, your have retention gross staff, any

Dennis Bertolotti

question. pretty knew is are while. the good West, a starting is where and they seeing There for on activity the we've in areas happening that's their a in where What a Yeah, to was quite grow this areas the bit been Gulf consistent. industrial

how are been it have for becoming West six So, us that And employees they to don't se, tickets, it's that Gulf about spend, the some just an months to they skilled cases, but sure margins and issue. the they've increases living were right trades they pass that through would they so those particularly enough, up. to the the increases because turnarounds customers where about large to make plan have have not us in to it that in year, increase been make in a talking they all per only and is talking XXXX long the sure and cost seen of staffed it enough

gross. the it We well bottom believe bump will it as the of margins stay bit a So, the the will is we revenue, answer little line but margins. don't same as will gross hurt believe

David Ridley-Lane

much. you very Thank

Dennis Bertolotti

Thank you, David.

Operator

from Thank Chip with question Canaccord. you. comes And Moore our next

now is open. line Your

Chip Moore

on launch then and are a how you could relationships of those Maybe midstream Onstream things been. in the on of little bit, has going Thanks. new US guys. reception the tool, how some Hey, expand

Jonathan Wolk

Yeah. in it's The customers MISTRAS sales agreements. to midstream United get have those Onstream's a It's base positively great States. cycle feel Onstream and just is master with the lengthy Hi, Chip. thing master many the extremely the and these that uptick is service of there Jon. into about we process We because, shortening customer service introductions actually agreements is, for typically,

And to expand. Onstream basis and, of a customers say, with you market, traction on have land you some of your nice service they and many Onstream and terms turnaround limited get turnaround going has great then customers. get this with enjoys keep that, in results earn those spurs those our first to et so couple benefits report runs In cetera. like time, far. US times, of had as time,

so his in reception of be tool, comments, the as in It's Dennis And launching terms very the great alluded and tools, well. XX-inch to shortly tool XX-inch far. new as we'll

so about it. So, good. very Feel excited so far,

Dennis Bertolotti

And, Dennis. Chip, it's

services, The done into integrated year we on those other of we yet with other and working PCMS thing and progresses it we're still really there as we'll that be haven't that benefits the think getting is of can some see as more other do. We feel Onstream well. lot and the our things there's we can gotten into a XXXX and

Chip Moore

That's And of – great. back the another that back much do that half the the in now? the the German pretty year? the of think how on business. just in remind of more segment the leasing – on Good one color. business done side. us International, that we Maybe about half exit modeling Is

Dennis Bertolotti

the There them they're surprised April. a progress It these and used it's we these Yeah, fast probably or take It's but little us these enough it. matter And the anticipate trying their folks a regulations, done that little more and over. when end business. just Employers knew flows customers, couldn't bit is do through even of expected. they're it XXXX. sooner. of to XX% trying and And what integral won't all little out year. go just are XXXX, employers started of to And maybe was be start to on new we large about moving being because to these they've figure it on a start will them get us been mention it it that. that in than actually. let hiring and to always they so for bit anticipated bodies bit just really be We bring moving to how by around a will through The they have talk

the €XX for a we believe, that number year. million, is good pretty So, full

two revenue So, somewhere it talking in will segment. of us. about – German a or somewhere next believe, from quarters, $X.X million the be around that million But behind end year, we $X by of you're the the loss the year

Chip Moore

seeing Maybe that the on on we movement, anything Appreciate last trajectory? the half, for you're in sequential helpful. That's should one me, consider guidance think to anything Perfect. the QX it. or on seasonality back just about similarly, in how

Dennis Bertolotti

When are Like any are and to bit, little seasonality typically QX and but it and seasonality, weaker are the fiscal, calendar it's year, there's change better reduced the QX of that are quarters. we QX a still always – there. two. QX versus

if stronger. schedule. So, there's off, fall. But this late and year. potential our late a hoping customers they than a a both good be stick and And pretty their a can expect QX. for always a out spring lot push pop could to little case, bit QX If then bit little QX to that it stronger move the be of We're that's we a

Chip Moore

Got it.

a Okay. Appreciate it. lot. Thanks

Dennis Bertolotti

it. You got

Operator

question And you. Thank Sweeney with Capital. Gerry comes ROTH next from our

line open. now Your is

Gerard Sweeney

guys. for call. Hey. my Good Thanks taking morning,

or changing what speed proportion a But customers their your of is Just then, quick oil the Thanks. then, recurring? little to of and on would bit how some in future? here. any up terms that changes follow-up And be, question. revenue to the in much you And workflow? of potential do getting gas have that visibility changes a Obviously,

Dennis Bertolotti

Three questions. right. All

Oil oil the we're probably XX% say, Let's revenue, and I that's in of gas, XX% reoccurring. to our would gas see. and

have in various not us QX going So, to a much of always that in to seasonality helps growth as sectors. QX. and market you're be the But

and they're in oil. good of lot a year, this us, gas our contracts contracts for and were Fortunately,

is try we've some oil bigger. power gotten, gas diversify that into we while aerospace, of the and to contracts the always So,

So, for reoccurring we're we the couple the a that type this got be percentage our reoccurring, holding going XX probably of like high total. next some year of to or range even as years in percentage mid contracts. contracts still the of the of But were

part is. So, what profile we're our more to and trying of make that more

I I'm to chance get the what a your didn't part write down, sorry, And of was third question?

Gerard Sweeney

I on sure just towards the you're end was call, standing Sorry. your making the toes of but…

Dennis Bertolotti

did. You

Gerard Sweeney

How do recurring staggered into these the hearing? Obviously, next that but are become they ones? there Is several should contracts, multi-year much what changes? are for visibility you a have of So, like revenue it sounds percentage I'm years. higher

Dennis Bertolotti

lose, an a of right. We is those activity Yeah, how win of to types months cycle. they those these see in in you're what more things, X What can to exactly and can't visibility we've these RFEs idea lot from – of but we a contracts. and the months we have or we're got months XX don't many to can all will to tell complete go is anywhere and RFIs you starting few

I are customers – lowest regardless think And chasing think ago, lot years of were after the price they that's looking I for a of changed. a consequence. couple of

more that oil for they're provider. stable, and they've them market Now a more for looking changed has the stable become

of the changes lot contracts. in a there's So, all

exactly bidding that's we'll land. seeing more we there. good is, What though, activity lot So, all what we can more are the and on. out things feel how Gerry, But say going lot we many activity can't about is a a we say,

Jonathan Wolk

Jon. is this Gerry, And,

call, focused those that's Dennis lot one out interest answer, why crawler. portfolio If things of to anything, within Just along customer really existing prospects additions Dennis' MISTRAS the key with to the the that really some to a of ART on with and the the within in generated add two of alluded to we're base the there. reasons Digital

So, the as occur. revenue, use talks be of two make will about amount that of anchors those kind to Dennis that we increasing recurring the increase

Gerard Sweeney

for Thanks answer the it. a hitting row. in and you appreciate I apologize Great. for three

Dennis Bertolotti

No, on toes. keeping no problem. It's me my good

Operator

[Operator Thank you. Instructions].

with Edward comes question Sidoti. from Marshall next Our

open. Your line now is

Edward Marshall

are you? guys. How morning, Good

Dennis Bertolotti

Very Ed. good,

Jonathan Wolk

Good morning, Ed.

Edward Marshall

Hey.

I maybe if wanted a on cost down you to price-driven much maybe get initiatives. improvement volume bit. line from So, as wage as just inflation ask the driven, wanted and acquisition margin drill was that the pulls could the we I how that services And a to through, of sense of Onstream top

If you in QX out services parse kind of kind with what occurred of

Edward Prajzner

helping. than efficiencies it's got helping Ed. higher Hey, Certainly, contribution the there. of is sales us certainly of The in factors base There's business helping. average being base We've mix our Onstream the helps. a combination definitely

As said, a labor push. kind some pass-through. Dennis pressures cost are the on of We're getting

be fronts So, combination a maybe Sequentially, out now. what's what have that bit. in you may little from margin potentially even saw But a QX got the you've or flattening from dropping leverage, there. all margin flattish contribution down QX you in good versus good

operating margin and all up of on to then kind close line. down have contributing bringing margin gross really you there, the levels So, us to pretty that percent expanding to XX-ish

of mentioned helping the sort all you there case. components kind got we've So, of

Dennis Bertolotti

it's is together. of believe Dennis. really coming – this Ed, our kind I plan is

and Some value see push good others. We've push contracts. to get to to better quarters, than But we've us and that in trying get acquisitions to customers little the been trying been trying contribution from you're in not and through is that of down seeing revenues. going EBITDA. gross think up I reflection what a margins go to And to just operating after our

I hopefully, that keep variation some after think will keep quarter. quarter-over-quarter, we pushing but to you're trend that be there's going So, we a can Obviously, what we pushing seeing quarter is, believe We this margin margins maintaining growth, well. we do part growth acquisitive the what organic can business, and some future. as our believe while growing is as getting our of up getting growth, keep

Edward Marshall

It's good to hear.

said for component. of revenue curious right talk about have little a you confirm maybe You've profits and the if the me call. Onstream US could very bit revenue in talked in the that, now contribution saw kind so you and would that about that I'm a Canadian-driven that in been you

Jonathan Wolk

revenue Yeah. in And the was Ed, was about… really it's quoted Onstream that related the to increases acquisition, that Jon. When Ed impact. I think

Edward Prajzner

X% of total.

Jonathan Wolk

X% year of growth over I'm of sorry. total, year. X% Or

that's But and been far States – the Canadian in seen the of of their the the future. United are. story and where really that revenues primarily that's year they've expect a it's we so terms that growth started in they continue this because has to the In lion's share where primarily

Edward Marshall

a I the here through services in probably holistic in business, revenue of the States. United of even – sense profitability – minor Is that within Is build measurable? just at run. kind through in scenario profitable could I that and as maybe United trial especially customers, States. that think seeing upside if that investing on Now, that out, trying both a to future could from a the think to you're as just runs to market look you see the cost view maybe geographic that more of of cost that when segment Onstream that your you're is normally the product we business, from even my drag go I'm something a scenario kind with

Jonathan Wolk

There's is The very great who what in upside. that line there do. few about they thing is Absolutely. business do Onstream of that the were competitors

to a business software what have our typical they healthier tend margins do, content there's technology NDT than and intelligence to we they just fewer content so, competitors to high because there's in like And what be do. and what

paying. better for very for nice. runs can The the a on be story. line. So, share their incremental add more the bottom that and the point, gain value now, customers those that that tend get, to, their the utilization more of trial in and us can we runs are to we better your really are And we margins revenue doing even But it's

Edward Marshall

the brought margin? incremental in So, could up, it since that talk margin the business, you maybe about contribution you

Jonathan Wolk

any that it's purposes, for product rather about kind but into Well, competitive not depth line, we'd particular go positive. of

Edward Marshall

kind of anticipated from QX the what and the and XXXX? When do so, of a there pull so. maintenance maybe just sense impacts to play sense of the ahead forward been period balance might how thought might a into trying the fall XXXX, and about have spring versus the that would a get IMO you out IMO into be look And get the you year versus I'm into I fall? inspection

Dennis Bertolotti

see asked one sulfur caused a based the we truth I The But diesel. on this track get do the turnarounds trying changed to are just for question We to what lot. by. don't the content got Yeah. is

coming catalyst So, work is, something know portion what some that of whatever of is this, there is don't track particular a – we down there to that. cat for in we and of in the contract we're part but that's for for is whether there part cracker the or is, it change seeing the what that's nature

Coast our than seen those turnaround other area it, our Gulf aren't bit of Our might IMO. little all much more on be more haven't more locations of seeing Midwest but the one Obviously, seeing West so just based that. and we locations, for getting a

specifically reasons We've seen them. causing said, a seen bit extending it little or turnaround Gulf, I've those we the Europe. it a track – don't we haven't to it like I in in the little bit but for

Edward Marshall

time. the Appreciate guys. Thanks, Great.

Dennis Bertolotti

problem. No

Edward Prajzner

Thank you, Ed.

Operator

And from you. KeyBanc. next Tahira Thank comes our question Afzal with

Your line your mute. Please please check mute your is open. open. is now line Tahira, Tahira, check your button.

Tahira Afzal

to and away your positive just is Sorry that about Can that, we in far I are about one the bit regards little side. having guys. aerospace whether that from I talk you been its mute. had you on Boeing a business issues? there now trickle-throughs had have some on question had guess

Dennis Bertolotti

we've was is from changes. issues some is now, – the seen government no, what What with But having Boeing much we internal we again, inspection. and software what versus haven't the macro immediately more the bug. bigger how external and oversight problems any that is Tahira, seen is right see problem

regardless that material If I type possibility third-party anything, are there's going So, you're inspections, think about, go the that us because very of are absolutely that companies. into things prohibit to these certification from that of it. something amount high of that we a long to have have if a jumping locations an other we being people for like and run, our upside changes, in of what more talking see

if been no, market going third-party inflection But from would in see this quarter, immediate hasn't out definitely So, companies MISTRAS like an benefit. the any does there, inspections impact. there

Tahira Afzal

Got it.

the all NASA around developments this program. lunar expertise. Okay. and the been And with long how be shot, a might could watching we've leverage your you thoughts Any then, but

not that's or focus So, area potential for do you an opportunities of feel yourself?

Jonathan Wolk

question. It's Absolutely. great

side and and think on satellites that sending because government private of on that I they're doing probably more up than lot you've got a on basis. rockets all companies and regular very the the side private

and as ramp new and of all at reinspections, working see, companies as looking up all to So, with we're going to that that amount definitely their material do liftoffs that those are we they with well. do has We with has through.

So, we as a that for absolutely potential a whole. as see us for and market the

Tahira Afzal

Got it. Thank much. you very

Dennis Bertolotti

got You it.

Operator

back would Bertolotti time. not I further I turn And am further showing like remarks. now to you. the any at Dennis call for to questions over this any Thank

Dennis Bertolotti

MISTRAS. today's scheduled everyone's our Have to you listening like appreciate to forward we safe, productive everyone say thank I'd to next like in Okay. for We on I'd look call. a day. updating interest call.

Operator

disconnect. you participating concludes have Ladies today's and and wonderful today's This in you all for Everyone, day. thank conference. a may gentlemen, program

Mistras (MG) 12 Aug 192019 Q2 Earnings call transcript