MG - Earnings call transcript Q2 2020

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

Operator

Thank you for joining MISTRAS Group Conference Call for its Second Quarter Ended June 30, 2020. My name is Tequila, and I will be your event manager today. We'll be accepting questions after management's prepared remarks. Participating on the call for MISTRAS is -- will be Dennis Bertolotti, the company's President and Chief Executive Officer; Ed Prajzner, Executive Vice President, Chief Financial Officer and Treasurer; and Jon Wolk, Senior Executive Vice President and Chief Operate Officer. I want to remind everyone that remarks made during this conference call will include forward-looking statements. could from results projected. actual company's differ those materially The

most financial non-U. caused that can were Reconciliation ordinance are these found Some the contained on comparable SEC. company's in conference the turn filed Bertolotti. SEC's factors to that can press in Investors GAAP available will report other be XX-K the GAAP U.S. will are discussed the the annual -- U.S. and I directly with of conference website. Form the The differ of and over reports those current at measures most the in measures with to section in also to company's can on and financial GAAP. measures include that not reports These S. in Dennis financial report prepared results now Form cause the in this release discussion recent in on call be actual certain company's related table X-K. the yesterday's website

Dennis Bertolotti

Tequila. Thank everyone. morning, Good you,

second anticipated, rapidly by make margin down fast organization compared actually maintain the ago changes of our and profit the year we flex conditions, quarter. business to the XX% But mean improve to in quarter was thanks As to quarter. our our gross structure, cost were face as flex ability revenue I it and year-to-date deteriorating second quickly to to extremely in able

of us nearly debt despite was year first quarterly significant to as year, decline. of Gross over XX% this in reduce same despite operations free a year same delivered and XXX% the pace. improvements half the variety gross ago the first additional record from level the in up which XX.X%, five was at last was best the flow margin year, the also And We revenue revenue. over double Cash a compared was enabled period approximately cash financial lower than to years of margin half a the last key across more metrics. quarter,

high drove pivot over demonstrates cash also to The to down circumstances, built. one which by worst success adjust we service on are economic in the Having in maintaining and for this quarter our XX% overhead level challenging succeeded recent quarter. the is quarters of end We sustain franchise positive MISTRAS' during flow our strong ability while preparing achieved the recovery in markets. of history,

our pandemic market have commodity believe serve we current enhancing strategy. is That service our adoption orientation evolving accelerate to adjacent In Access. Rope services market, added that traditional to capabilities put oil are spot new and markets. we global also pressure on essentially, has all from by We way for in adapting to more integrated to changes some We condense to bright we customers the which partners, preparing value in pandemic. this we difficult created work, to A these times doing being their the by accelerated any offering new service the this to value-added the capitalize will is why are mechanical opportunities and sweeping chains have and been more we and are their actively fewer, time. its our traditional which with NDT and anticipated is quickly orientation. traditional diversifying supply change get been being into the a definitely as such our gas from of The work, complementary have

our contributing we technologies and intelligence tablets, these digital We MISTRAS' as bringing such intangibly. and success under and our are are to to ruggedized umbrella. capabilities cost-saving tangibly both time are also introducing Already more customers

when home using they site. they instance, get own did than MISTRAS Digital their we customers For on have they anecdotally, that heard believe were of job information our at some better

in also involved of Internet very the Things industrial market. are emerging We

our sensors embedded where having been have in of bridges. success various are For we being instance, with Transportation, Departments

which this where potential. opportunities unique renewable we into are can in leverage supply chains. We market seeing In as seeing our aerospace, growth technology power space represents This tremendous same of compression have the well. the are trend in we

aerospace our tasks We contracts, takes and this individually cost we demand there supply will supply consolidating ability are to to the a valuable by where move with to used are growing similar the believe in greatly done the to have apart add addition for owners chain be reducing substantial number the through Airbus offering separate Again, it have value vendors, we savings. time their experience gaining to to chain. of

one offerings is area and product the broaden Our our has service efforts pandemic impacted. enhance global portfolio not to our

are accelerates, the reducing business costs budgets headcount, hours better chain, billable consolidate increasing. went and continued and as July. this ideally while As improving customers complement supply opportunities bidding we are the we to conditions and saw intelligence. field hours, loosen improve we into as from transition levels their track services gradually technician these trends we we their are Because quarter, and second through to positioned the generating activity Reporting worked believe help value-added

year we in For cash will and challenging our Capex our strong oil new over the the the a within fund many up entered to quarter a flow start the managed reduced the remain liquidity were ramp second be contract the awarded strong believe and example, scheduled our gas position, prove year. most soon terms through American just We to market, North half of of bank of large in we which well successfully XXXX. needed having have spending, balance is the operations and to With and agreement. the of what

should to a XX% the revenue second that expect half. steady the the technician we on hours the recent second to have Based we the into quarter year improvement some with We first be third high-teen second and during contract new the are higher wins, quarter up seen, in lead improvement will sequential level in activity This good the momentum. of half revenue of XXXX. over half headed than

second in further believe believe we as We the in increase XXXX. of to this flow well support total as operating year. this debt half will reduce cash half an the we first revenue of also positive can This adjusted why half level is compared in second the EBITDA

The putting proud our challenging period and and of extremely second how continue the they customers. challenging in continuing these services, the MISTRAS and By first, with they to conditions. XXXX was safety of our team for and MISTRAS, quarter perform associates, our while deliver I a outstanding strengthening relationships are to partners am franchise our clients

to the over more like deliver committed detail are on to you turn are improving give and would I customers, continually and improving of deliver second Ed financial committed We to for to XXXX. our first the value to equally we to the shareholders. now value call to results the the quarter we we half

Edward Prajzner

Thank you, Dennis.

our and a revenue the will point we with in we million, was run early over this than revenue entered coming year, be July under August. Second down much revised low And quarter has will exited June second that into our outlook, Hence, this at which continued and at the XX% from was the improve the we April. second rate revenue believe trend third quarter which progressively quarter. that higher $XXX believe We consistent slightly of quarter. quarter year was ago quarterly

high year in over For XX% and prior our key the slightly turmoil level XXXX, recurring June maintain period. extreme six business same revenue months run markets. ended from This for of was the revenue the of despite of XX, is work our our the evidence end

prior which despite margin, sequentially million second quarter, represented XX.X% from first profit generated the basis a quarter. gross an gross of profit quarter revenue $XX.X decline of Additionally, second XXX a XX% and the increase approximately the in from quarter we points of

Our our costs lower mentioned and being second maintained ability significant margin profit lower despite past sales fixed a well have quarter and as the pass-through offset absorption temporary gross travel, is level. profit costs, under have margin highest with attributable function years conscious in to is reductions we we On over variable costs, the flex such our mix XX% realized. as earlier. government demonstrating decline basis, effort rapidly cost our level quarterly gross the margin to and gross profit subsidies that favorable organization, Dennis is achieved as a as to approximately at This sales of our year-to-date five

net EBITDA of quarter year. this reduction of in through net quarter rate XX% in and approximately with for or the XX, to of and added ago this million April compared reduction prior We this the to Beginning addition million in $X.X in third efficiency translation, the XXXX. the of program by expenses. quarter. to decreased which compared year's expected XXXX, million all year reduction run were the period. despite $XX.X decrease is over We overhead XX%. Century's unfavorable a overhead second generated global volume of general $X.X our at least in of and second cost $X.X to income the we million combined year. approximately June to New to selling, of is of of a X% million initiated compared continue of the to is administrative covenants Due quarter's compliance the XXXX, reducing cost This response pandemic, loss $XX prior expenses which in year This quarter's as bank by FX revenue to recorded in XXXX the slightly Second as quarter we incremental adjusted

cash requirement of with of liquidity million defined $X.X requirement credit generated the Specifically, million, of revolving liquidity $XX.X agreement. we minimum of we for cash by the and versus liquidity as credit and million, being million the EBITDA plus And second secondly, equivalents, unused maintained a as was $X.X quarter our XXXX over on million, quarter. $XX maintaining $XX exceeded minimum we EBITDA for minimum

suspended are, maximum pro quarter is wherein X.Xx a a currently basis already it of fourth XXXX, funded XXXX. level leverage at X.XXx, basis, at on debt a resumes the XX-month rolling we as the June ratio XX, Although of forma of on until

used free generated cash cost flow, paid well since year. cash given last Free during down XXXX. only hand to levers and cash expenditures quarter. benefited cash We interest give $XX.X prospective enabling with taxes. of the $XX.X second million to on free cash the exceptional million achieve expense XXXX, of compliance of conversion, flow of strong capital cash bank generated the $XX.X our free the cash same in the quarter $X.X XX% expenditures, second reduction And nearly to We reduction pay million hand flow bank necessary income cash of second in operating debt on Our quarter, $X.X we the a compared flow quarter end a for help from of us in covenants. quarter million as and of discipline us build up capital million for as last our flow

CapEx XXXX, this at for spent XX, XXXX. $XXX of $XX.X cash a million $XX.X debt For at of total debt, $X.X the equivalents, XX, significantly line only we've in Accordingly, defined and by from of million million $XXX.X Gross the basis, XX, at cash XXXX have XXXX. debt. was to total March at total a typical decreased year compared with June XX, December first debt is $XXX.X second months goal XXXX, $XXX.X as net paid June six This million down million our to our from reduce our rate. million we run CapEx. XXXX quarter to during On year-to-date of million less

expense Our was period. a the to of XX% year benefit tax the for rate prior in XXXX effective income second XX% compared quarter

the rate statutory tax be from in effective The in six to recorded due that rate, prior year taxes months rate XXXX ongoing six The XX% the quarter in for the impairments and markets, was than primarily months was Tax to our effective benefit the XXXX tax compared to XX% statutory Jobs lower XXXX -- XXXX will rate full to in the of income revenue due we to earlier first largest the income effective income global second from pandemic period. realize on down year to Our rate to during the offset the aerospace. of higher XX the and and impact in the benefits. XXXX Cuts expect expense we of intangible for the oil tax anticipate two Act. was tax year by do in effective XXXX a The improvement than to but compared gas or tax up quarter CARES to Whereas not tax Nevertheless, year, benefits rate the income This in tax high-teen to XXXX of the rates of which items, Act. partially was expected mid-teens. low unfavorable third and December effective income impact not income quarter. discrete ago sequential for continues is income COVID-XX the impact low other being a provisions XX%

any we XXXX, EBITDA this progressive and outlook cash markets extremely including second the of recent the the is and certainty of that with at continuing it than of flow be on in half continuing revenue in second adjusted the ongoing time, difficult contingent mandates. in will half recovery While with certain the free in higher believe XXXX XXXX. relaxation first consolidated a of positive is forecast of oil crude degree stability, half to improvement macroeconomic stay-at-home This

are We business in over to Dennis. I And strategy over our firmly to that, also remain confident and call sustainable will committed the with turn out and now our back term. model the today long carrying

Dennis Bertolotti

assets, that important as those more condensing more new improvements that allow companies proven thoroughly we equipments searching the sophisticated believe such forefront which periods us technology our at such improve and collected turbines, use been to their target customers into has well in at them such this assets. in our significantly innovation. crisis Thanks, that much and to owners a and base, for Ed. by the assisting the be also knowing as that necessity and across data of better moves analyzed, more machinery. market the performing With done adopt their more of of look pandemic of thus generated that customer their approach is being lists safety world catalyst monitor driver industrial innovative work. and smarter more of new these customers will strategy, apply for only vendor forward partners not current the We to in pandemic data tenets where MISTRAS and This recognize more can is the can efficiently current much real-time new future. intuitive creating will improving a business This be looking dramatic them and providing more We operational it as MISTRAS a online to for being and as believes long instruments, future. the one is that with transformers more believe It's is better which path we intelligence. ways will other and efficiency rapidly a they information, with many times can been various as remotely, monitoring as being and critical owners existing our equipment. manage will transition or they can segments but their is

employees I customer questions, MISTRAS' like all again also your safety dedicated in taking trying would and Before to shown times. thank you extremely have dedication these your the to which service, for once attention

Tequila, lines. Your practicing working. connect is open care and please of the phone up

Operator

of question comes first David Your Instructions] America. with from line Bank the [Operator of Ridley-Lane

David Ridley-Lane

the measures on quarter plan third the other for morning. furloughs the Good demand? you Ridley-Lane David reductions is Andrew. in do This cost balance supply in and of how temporary and were using you potentially quarter? on What achieved And sort second as

Edward Prajzner

-- one. of footprint hand. calibrate QX to going outs. mean, the take QX lot like the look continuing in David, a is We're this Ed the terms here. I cost to We're to this at revenue I'll cost is

it's the revenue. is to naturally. good traveling, goes going we're So away with not a example. scale Travel that If

that's And QX. comes the QX the essentially taken to in the As in estimate being currently. of measures we've that have back, got XX% back. due it's a from similar very there number, decent-sized place work cost-out for But we comes out a SG&A

David Ridley-Lane

And portion would what portion XXXX? the And from the did clients' planned it. what a you out second shifted visibility would half? you shift first plans, quick into -- turnarounds into perhaps half of better say into the follow-up. what Got With estimate

Dennis Bertolotti

you that still want you to Jon, do be Jon, on grab mute. one? might

Jonathan Wolk

sorry. Yes,

region. about interesting planning, Sorry directly that. working It's we've with been time every every been as in customer

Some elongated. turnarounds travelers. ongoing XXXX, some They've ongoing, half the have been and have into been extended. without have just some deferred been been been been deferred second they've but They've into

terms quantification. And mixed open into to probably in well. at the It's it's I'd rest a questions tough we've scope, got turnaround question in sort what and year. seen that scale what bag. and be the a so as many XX-XX of of it's say years. season It's will are And probably give then this deferred a precise been of the those weirdest

Dennis Bertolotti

add we a turnaround eight hours. seven or week. to is I'll The it's David, week, five been that reduced and going turnarounds have a color They've days that. a to a days. been a little been days They've continuing going so Typically, going far, hourly seen on point, impact. much they've or XX-hour at XX six John's very

to really one even uncommon actually we've service ask bulk we up had service and turnarounds approach us online, that's do the can of the Some they them schedule turnaround fitness look take in they've stream for their XX. if asked could few the a to calculations. We've as have we and as they that look COVID, based what us well a for major And are did and that components delay impact had past on it. of the the the quickness The just be but fall, customers us are on would because rightfully equipment the for extending doubling one. taking they fall for at doing what it do inspection overtime, been coming had it at and on their where

two get a that case pushed what percentage it's than into pushed got out more point, 'XX one right impact further in it's quarter. actually into or got in -- only of looking QX second a in we them the John's pushed small to are affect I now, customers So most and that. a believe the half, But see seen we've

Operator

Sean from of line KeyBanc comes with Next Capital. Eastman the question

Alex Dwyer

for off back just on Alex the Congrats last Hi Maybe Sean. results. on to guys, strong This is Dwyer question.

on then it I XXXX, or and next Thank be like outlook we for what look year. call year are the should we deferrals revenue with is metrics? customer the budgets factors guess maybe big seen some As And what you. sense a what or on year, economy you next just whether I growth out would wanted even you've general to be tracking, budgets Capex your the year, swing next for get Opex to this potential

Dennis Bertolotti

Okay.

our creeping track week-over-week hours for certainty practices just XXXX, So normal amount hoping and the turnarounds that's the hours of should to monthly what we're not and will just that a see safety as we see in seasonality careful we that as amount than the the back it's track don't the because get sooner some We you'd rest. to to it resources. very We good far let's taken There's the let full billable has as then happen them, they length. to try the we that they guys imposed bodies much But back. being and working manpower the on I'll of set just as throw be be to first out make year. as We the to other the we of of 'XX coming the almost versus spend Truthfully, COVID it fall go other the idea take forecast are about the of yet. We and we reductions as the had do at no it, is haven't think of planned. about where The They're but We're to we on going close been. year can. well. and as COVID, how want, has the fast yet. budget recalibrate They're will face that on our XXXX what approximate coming part were know But the trending, up. close rise. from everyone way way bodies previous

Ed hopefully, add best, we Some that to XXXX get is or And customers the we a you see -- a better. if far. on then Jon, what fall relook. save may going to couple of again, dollars. we're of try we at But more haven't look gone going us, right that? to But now, to at want is

Jonathan Wolk

I'll believe look, this Jon, will to thanks. Yes. tag year. Dennis, and say, half just on first the here. half that the of second than be we higher

to into growth saying, to 'XX go that's QX. in was baseline, Dennis at a close of as off fairly next assuming going particularly As see you pattern what XXXX low least significant a very you're some was, year, pretty

Alex Dwyer

or the become next Yes, becomes see competitors question the share, some that's regarding Can to which sectors stress gain talk incrementally point very regions And gain my positioning the environment. you is helpful. share? at about market there competitive of a smaller is And opportunity that the better? or

Dennis Bertolotti

you lot restaurants, -- Yes. communities about shot certainly, definitely much, Small of hard I'll hear first of take the it's time through having else. smaller caused bigger on getting it like business businesses business stress small ours, everything and that. ones, There's a bars on are much in and the and a this.

to about through going I five-year customers to of this. think not and three- to of ours, there are stable forward. to there's they'll smaller be be a ones look But going talking point think knowing at vendors looking technology, be to competitor of can for difference be be the only there smaller the I they're think contract of a They're stress going financially to give they to on I certainly that all do more or types project. going whole one work. doing it having can do ones different that smarter what customers lot some from looking of going is or my face let's more also or rate. more At so to take got a you and more point, types vendors and means that much the take from and only much trying fixed of these on effectively, an less of rate you more lot of and Because these steps steps on of so and can a more just situations a take it, complex away to times, one ours, hourly

and be customers are base. looking their looking it's are vendor changing I going So to at the way people think actually

Operator

of comes with from Sidoti. Brian Russo line next Your the question

Brian Russo

third the third a kind XX% about quarter increase the XX% ago. quarter, implies the in sequential year of up second versus a So, it of quarter decrease to still from the

to know bit curious Or more of the delays on driving year-over-year driver. to is revenue Just earlier, get to the referred what want I the in just color Is you decrease? it it little cancellation what's the turnarounds? a projects?

Dennis Bertolotti

Yes. I'll me to rate. first, months. of but the I XXXX because and to closer get say, I We're can it'll But take even few gotten Jon next there's if companies We're would and flat our I'm hoping that a sure to up. now know it. truth in we the run compare sequentially talking back don't we're space, think Like approximate budget very year, the XXXX, is right. yet. to I be you're But XXXX repeat haven't in these hoping

and going at reduced levels. you're bit done on bare even Europe our for being rest see right be like year, spend hold and gas They Brian, when margins, We're we The a turnarounds States. change the definitely in of being revenue. oil in right are It's So now done starting to that the and aerospace may I the to customers, more be got a of hit to going United quick. little aerospace truly, in say, our in a it, the lower now, load We Europe. see decrease minimum. at early just stay can for aerospace but

spend the whole compliance need on may They what and safety they and complete turnaround. not sure budget done. may Sometimes, they'll that their make or the

are things when our the to stricter take if COVID, what all customers being cautious truth about give only because that know local. we're high worry at you the contact is, Gulf and we And is happen. And start guidance can could happens looking the those mandates. folks and people they in it impose rates will we So are these the

going and are them. not matter to want country the around into going subject to travel bring that not them locations. The to we bring experts those have You're customers

So they reduction. for things do

we about So well. as worry that

Brian Russo

think second you And can leveraged that cuts quarter, the be clarify, in said equate Great. gross type third the cost to margins? also Okay. that I quarter. the to Does in similar just

Edward Prajzner

Ed here. I say it's profit more your that's margin, year-to-date XX%, that gross Brian, going expect the forward. what No. would I would

out, some or of really little these one example, on. cost margin they're through no passed As very as such with travel,

don't keep we expect to continuing. XX% yes, quarter's So this

As come back, back. revenue your comes some of pass-throughs

back you we the what through looking six of months, the the expect XX% year. believe end should be to in So that's more

Brian Russo

Okay. contract you earlier. question the downstream that Is subsector oil or one oil details on then more Can gas? mentioned provide Great. any and And gas you other that? midstream, and that any on of

Dennis Bertolotti

refinery Yes. it around. because could we more you a not not it's but and typical, I'm We're a, sorry, actually little being running, little cagey it, the a different up it's or of fully about upstream, -- still what way just It's say call sector. downstream a It's other bit than that.

Brian Russo

gross other two, sector. segment margin and Services it it perform other the the basis the that a on than like your better like just looks And looks International

can or versus Services incremental just elsewhere? Just between costs what in higher-margin differentiate product you there ability to offerings -- cut of terms

Dennis Bertolotti

quick way the the let in the difference Jon I'll the countries pandemic. Brian, think explain, easy but is the handle I answer,

in fix ability get thinly. little quickly. a large a the it's and to quickly the Europe, degree inside bit you Canada revenue have this In level to States it as where our very Services take able handled to resource know, be We with United utilization from, the and

handled five, -- on filing days very for is In various there six in countries they then And the employment the recovery, after money back back quickly. get we the it, were way very So getting the our money we'd and inside facilities. stayed everyone quickly.

trading like it's a But just almost all pass-through becoming kind So it dollars. made money this respect. is thing it your of in easier pass-through, that because

bit $X in You're paying $X country. or sometimes the off or less for little back a employee

of it's washed. So being money almost kind

mean. You know what I

to is want anything your of So to that. just down you go that? margin Jon, add because if going to

Jonathan Wolk

Dennis. Yes. agree with I'd

flexibility more terms have hours reduce to making cost those so in the of in and the forth. and being States We able reductions United reduce of headcount, to

flexibility. lot have more a We

mix. sales the and that The we had other in thing Canada, United good States very is a

mix QX, more aerospace the work in toward During that and tilted favor. higher-margin pipeline

helped that on relative season. less that in much costs work. X%. other a or And typically well associated the help hand, earlier, certainly to missed as cost, We But by alluded out-of-pocket X% Ed So busy turnaround traveling sense. as it did margins with

Brian Russo

One mind. if don't Okay. last question, Great. you

MISTRAS I industrial become revenue what versus Internet mean, of driver? a Just now. bigger tangible point picture, this and You right the Things. referenced does intangible Digital at

Just of industry what and is for bigger outlook that your curious picture innovation? kind

Edward Prajzner

now, mean, one than more as Certainly, thing driver running in Yes. right been budgets a them bring slashed, them very a But reduced to by we're it little and I trying a revenue to market going for charging of a show quick looking that save are that, Brian. on COVID being revenue. John's outside I'll of it, but especially flexibility Their customer spend problem. money has with. they to have of how will say actually days you're number. the some at us upfront

have our that done for get show technology we we So this really believe us, difference that how for can in work customers. we a

to it's revenue to market. important that retain to goal. you add there So on? but be always and there But our Jon, is if in truthfully, most to our not aspect is the be ability the we some going main see grow going want

Jonathan Wolk

resource the Yes. in Thanks, and And what our market get, the biggest agree. at streamlining think customers trying what I'd a what's term, we're base this. two they share employees ours. say longer we're for and them, how in on more are is for drives experience win better totally That's drives productivity really of on benefits I for of visibility going us. they and terms -- also get work of their to the status to both plants the I Ed. their in enhanced the that

Operator

question next of Pinheiro from Sturdivant. Your with line comes Mitch the

Mitch Pinheiro

if repeat. hi, phone the I anything apologize I in good lost battery Yes, morning. my is ask charge I call.

In like quarter, half? of terms second run do where in you what revenue a business quarter in your like percentage maintain and of Capex revenues And see was revenue? the this this versus

Jonathan Wolk

I we Yes, I'll out it's Jon. don't start. take I'll those. break it. mean, typically

spend project was run I were being work it's many a there QX. just projects projects and But just looking hard discretionary would more tell. say than maintain work was that little sometimes to not And there because lot to customers bit on during a typical in timing, anecdotally,

the typically. base that than they were did So more much we maintain have been would have and revenues run

Dennis Bertolotti

Yes. site. as little that. bit a or a less others do, near on where big of more we sites we're Mitch, triple strengths just at have because triple a than one handful of at many actually may That's that's this a having people digits hundreds why speedup expect got digits as our as or we would we we're capital not than through to that have is up dependent part

So our have to ability folks.

at albeit number said, number the reduced they've that hours They've the site. folks site. the Now of of at reduce the

just doing sites a So running. typical spend have They the Jon saying I like mean and you would still you year. seen in weren't up that was had

Mitch Pinheiro

play a this to a to -- I does we'll -- back [Technical run going and if so through can can mean, does you come I that reduce number normal? -- Or permanent and we I down up have headwind? that a if they be bodies on cetera, do to of et see hours on-site basis, the in mean mean the road maintain is hours, is reduction keeping where difficulty]

Dennis Bertolotti

on the shot I'll Mitch, that. take first

you're doing on part, Jon Capex saying, most right? you're that. So costs, they're for they're on not what reducing They're deferring just like -- was the is spending the and

doing what and it. taking most most urgent you're prioritizing So and you're the is for rest is you're the to related deferring of to what and maintenance as safety operation, you're part,

more show can operate more services support service we that like different that it less them way. get digital each to going to one take how on effectively and to of everything do bit extent we're done maybe and things and with and a the little to efficiently that, Now and

how are customers comes for done. you online when they we're It's be to going and got down road get it pushing But you're the could not doing by you you bit. telling in customers prolong my And still a it So eventually how engineering really turnaround, little the I -- looking answer, use just and do inspection a even It benefit first to back. it. benefit maintenance. can't maintenance to

Mitch Pinheiro

keep at a happen or spend are all have is to there -- where of eliminated customers how lot Yes. projects, of giving to to are I'm get view guess, to maybe I is think sort Can Great. we XXXX, not going that into a are thinking? to a at just happen they know look level of at deferrals, all mean, in customers you guidance, when And XXXX, that the be have going trying XXXX? but your these I point? looking I some do you're and in other then, they you

Dennis Bertolotti

first want Jon, do to you take shot?

Jonathan Wolk

Dennis in gotten if Mitch, getting as and now, is and have many saying, deferred waivers levels having OSHA to of with customers feels sure. so Yes, of was typical terms it like, comply inspection forth. work

temporarily those the of obtained indefinite. are but because have deferrals So COVID, customers not

you're but catch going point, Dennis' to to you're to have now, up work that on work. deferring So

is ongoing saying, of demand perspective, longer-term dynamic in is From that come there Dennis of customers pent-up work. because efficiency digital, that's now. the reduce of coming right there where going building continue and an terms on help some basis, non-value-added So we're is amount in as was that we be can a to to

not You're amount administrative but to the of can of inspection. inspection to that around work going the reduce amount happen, you reduce that needs

that's should to net, So to deferral next of think to should come and net than year. the lead there's in outpace the has more I -- growth work

Mitch Pinheiro

Okay.

rate right -- In sustainable terms fighting quarter, have job in the we a SG&A, the of Or like reached excellent this is Is costs. cutting level? that here?

Edward Prajzner

go -- mean, find back mean, -- about yes, have ago we're to level at I three the now. to you this some I years

This comes sustainable to snap need. recalibrate So temporary I overheads, and continuing back. back the look outs we're at volume when mean which what is there the a fixed will is level. we overheads But cost certainly some

the subtracting, We going overheads adding right forward. not will now be to fixed

that we grow. and But footprint. taking reduce is are at level it as can it to now and that we hard comfortable we a We look further business. at the doesn't that recover. of need very certainly it continue So kind it to are keep see volumes recalibrate And still the support

the taking your at are to it's going we So at question, that. hard we're forward. answer at look sustainable a level now very But

Operator

no And further this Thank at you. there are time. questions

Dennis Bertolotti

Okay.

back me Thank Okay. it then? you. to turn you So

far gross to strong demonstrate we cost results profit and Okay. I'd our thus to close generate sheet. our operations footprint flow this up our year flex that cash ability to margin, to our our saying like quickly maintain fund by while balance deleverage our

of We market will EBITDA half will expansion. be a revenue recovery the growth there in and adjusted resumed XXXX with believe second

digital plan customers the more is bringing MISTRAS' pursuing work, chain been our more improvement at customers dramatic sweeping technology the driver to unique leverage tremendous in and consolidate umbrella. opportunities global believe their by pandemic, we where prepared the has of under are better the generating ideally services accelerated supply markets business for the created while on can transition help opportunities we being the changes we way And intelligence. which all to leadership the We and forefront are industry, and our Necessity stay to to we the are our value-added capitalize potential. we in which intelligence innovation, of by growth specifically have where we positioned into

prospect behalf everyone and thank would wish joining and remain value. resolved long-term future. I extremely increasing and firmly for whole to shareholder the prosperous call On I you. MISTRAS' safe, always, MISTRAS, confident and healthy a success the team, optimistic of As our today, we in I like am of everyone to the of Thank

Operator

This conclude today's Thank does participation. you call. for your

disconnect. now may You

Mistras (MG) 8 Aug 202020 Q2 Earnings call transcript