MG - Earnings call transcript Q2 2021

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Operator

Ladies and gentlemen, thank you for joining MISTRAS Group Conference Call for its Second Quarter ended June 30, 2021. My name is Olivia and I will be your event manager today. We'll be accepting questions after management prepared remarks. Participating on the call for MISTRAS 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 Operating 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

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

Dennis Bertolotti

quarter. Thank domestically, Together believe of first leading in markets what the into year defense, Europe. solid We in XX% markets mark momentum to markets of year-over-year strength in were both up over continue strength would and date so were results the have with outstanding, market nearly quarter, all continued was aerospace to be Consequently, of XXXX. and the end excited we'll about you, XXXX. our are XXXX. revenue the second this balance first of will energy in exception will remainder over believe up a of the with although and quarter, quarter achieved with this everyone. including quarter that was sole the internationally. morning, over Consolidated rebounding half the we our us expectation we in and do end onstream saw Actually, our that inflection the second growth Olivia. trajectory consistent point up our for in an Results Good

and all substantially product quarter now evidence sequentially And the measures a in have last were which second the mix. year, increase decrease of Compared gross the due given restored. over over and efficiency prior-year by due a margin Selling, revenue year-to-date such first over million essentially most last Gross pleased increased focused pass-through On focus to a dollars diem place containment. both clear per and months report of year, which as XX%. is which is profit COVID periods is which an in very profit been lockdowns being of of This second travel year, last cost We increase. XXXX, gross from month XX.X%. last of year. from level with as primarily also quarter first general six of enhancement did is anticipated I am $X.X relative basis was the profit prior For up had basis, on of that XXXX margin our XXXX, to XX.X% margin remarkable year-over-year quarter, the and cost flat on six lower margin SG&A costs, quarter year, to keen up to on XX.X% $XX interim significant been administrative expenses to reduction the million remain through profit gross improving with is is restoring gross profit consistent essentially SG&A better flat. have

of impressive improvement had was income, and net in a share. a diluted Given revenue $X.X five-year This XXX% at strong overhead period, which the second an operating strong of $XX.X over of a our $XX.X the this gross of XXXX. nearly increase or $X.XX we EBITDA for being prior-year consistent percentage million the controls, quarter million was per XX.X%. profit quarter this also margin income Adjusted high million quarter, drove as

our a EBITDA increased efficiency, lower well EBITDA our X% were improvement all-time high operating only productivity of XXXX. are adjusted volume. This with demonstrates steady dollars the as as adjusted second in leverage as reported addition, and creating higher In than we quarter in of levels the

the I initiatives, solid us costs clear increased confidence continue and requirements. We a more return I MISTRAS implemented quarter, line. this increased to support with have the strong in to virtually with perspectives, very through we growth very the to growth that on million to conditions. a this also that finer growth demonstrate agreement cash more I'm investment with but operating bottom you extremely further lending entered credit revised invest our positioned financial previous the generated going capitalize the in enabled us pleased further second second Ed leverage pleased our we would quarter, all initiatives. substantially want $XX.X agreements significantly this our focus fuel in reduces And to reduce and walk to XXXX condition, details, a our of the From to normal and flow to our we which reducing while emphasize are strategy sign that Results financial enables quarter ability credit improved on compliant have economic increasing that is borrowing covenants bringing are our also quarter. which quarter has to allow well shown the will was we also all on our syndicate under growth. to debt. our they that been providing am

slow it seasonal quarter the captured in later result, into going the mentioned delay as a the revenue revenues turnarounds turnarounds revenue into as for Looking And as start longer were arising spring turnarounds ran exactly late strong being the incremental than more second case. and the in usual energy to was the looked the again as ended closely we as June. well up at spring. This last we like our various start storms Gulf a markets, quarter, how

indicative to now, turnarounds and right of While as energy predict, they're overall rebounding. condition the And energy market. see the may be markets periodic we of difficult

time For more range. intermediate the both were market, market to to largest remains our that at believe call fossil the for instance, recently Energy represent our barrel barrel of closer last the and been per energy per $XX traditional, we term, hovering attractive over an renewable. near continue oil have prices in Consequently, mid-XXs us. will to

and owners in our costs. believe ruggedized that exclusively We longer have proposition succeed choosing We to no value a offer increasingly tablets share are multi-pronged market partners them PCMS technological are running we innovations, MISTRAS strategy share. an to competing take are continuing With their first profitable energy, price. because all-in we growing attractive reduces which other on by Digital,

we expanding NDT mechanical, in We are services we as OneSuite, easier offering rolling our which can XXXX that MISTRAS. also grow capabilities more which half our products will by by traditional for rope scope be control a to out access, project other it data via And and stream makes complement such services of which represents costs. finally, of second introducing adjacent new growing services and revenue

We turn also owners, point believe which a to each stickier margins. of improve MISTRAS these strategy in become allowing of should provides with differentiation,

being recovers, a midstream, less As our serves downstream market, segment also which the Canada. of volatile the in domestically business and is market growing, both energy

pipelines and infrastructure can new, Pipeline Onstream the only has pipes, have they maintain Canada. any and diameter on older is they both inspect larger the is which revenue also does new, also these experience is relying in can introduced dramatic new of demand our older to of about tools but and Today, stringent energy safety through market increased not termination determine their that has which XX% the inspected to on comply instance, markets larger The opening producers United up regulations run business, creating turnarounds. existing the or if average demands, to volumes PHMSA. of with not ongoing capital periodic States the For aging ensure budgets peaks accommodate valleys Keystone also from more pipeline. including generated in

industry will we to to anecdotal occur this continue aerospace later less mid thought, that evidence still of although aerospace not growing we probably stream. recovery partner, Europe, than particularly is implement the hard even commercial has valuable hit, suggesting year. previously revenue bounce In reoccurring our aerospace, there the we increasingly become As an believe will is there until proportion in to this volatile, going been back next sooner full which in strategies,

up especially basically revenue run international Elsewhere, our quarter, year in in commercial continued aerospace segment. private fact, of sectors a domestic double by In US aerospace defense space being is growth in are was offset where in the rate the ago. softness this sector that the and

to closer early interesting satellites. business become work, is penetrate still as the the sector, private operators on both we and could While growing materials this very market, privately of a we could for as whom the we inspect spaceflight maintaining it Earth

significant also inspecting are new and progress. energy Customers keep make already in turbine wind renewable continuing we sector. Our the are efforts to adding blades those to hubs

demonstrating Emission provide are the in proprietary sensors today. how than algorithm of information We very our can sophisticated currently better used consisting detection inspection technology the market and technologies Acoustic faster

new a their for current activities, as of offered of While on referred embedding we centralized on perhaps transformation initiative data ultimately value asset our sensors opportunities one and we working environment. data which most by serve innovative, as as of our also previously in plus Project customers MISTRAS' functions the in are MISTRAS to protection OneSuite on our being applications integrated insights introduction But ecosystem, significant software while breadth customers' most manufacturers popular OneSuite, can is of software as for we software services step a our directly platform all from the properties, to and products MISTRAS' depth access cloud The serving into brands exciting software offers portal who providing their new and also platform. active apps will digital discover of XX single asset are our and the protection a programs proprietary existing with assets. believe increase CAPA.

ecosystem, Put greater we more Right you thriving about in each in apps nearly now, would launch participating the of for two future. detail the Just we financial about the whereupon official will sharing much smarter more very platform depth now other the Later call simply, time. year, OneSuite a real more makes connected enthusiastic second the ever campaign. give in asset I'm launch. within I protection aggressive to customers information commence exciting turn like soft speaking Ed OneSuite system than over like in have in which our be on dozen have quarter any MISTRAS will area, we will to this interact results OneSuite to critical digitally very and the we with before. the XXXX.

Edward Prajzner

are other or appropriate ago related macroeconomic a outstanding perspective. It some extreme an key factors, high records year you, of an and Thank in and the the the attributable it And EBITDA quarter best overall adjusted improvements effects we the point. A was from second accomplishments morning, puts could pandemic more to quarter's near nevertheless while quarter, records Dennis. quarter all-time year-ago on And and be adjusted truly margin over the good all everyone. COVID-XX of time inflection the five new EBITDA historical established year in metrics. several a

revenue gas in market last the and prior which of improved, basis XX, is now and months the which The XXX is and due XX.X% the June again, total increased the All exception the only defense sole XXXX, was down as organic the for exchange. half period year aerospace comparable to of up ended foreign segment. for year. impact and quarter is up predominantly first actually end modestly the For revenue of market, of single oil markets digit XXXX, as from well the low for favorable three with XX.X% XX% international points quarter, growth versus

having year such gaining profit large or continue Gross a and Gross will while expanding margin Dennis while space to and XX.X% tremendous market a offerings us, revenue market basis on at over although year. expense are million traditional mentioned, costs prior are was XX%. related our to initiatives best energy, Keep by ago both we private gross normalize, at due growth mind the and as and for our was just these but in our profit increased and reducing absolute and and success in consistent down XX.X% over earnings. volume. as margin $XX from a to share, in reimbursed customers As has of growing dollars incurred, service profit where quarter for the percentages, XX.X%, oil renewable as compared the year-to-date conditions effect are our gas up travel digital, the we invest remain gross increases, current

revenue current we suspended recalibrate costs again then and that the with rate. first run quarter, flat, costs calibrate and even our revenues had was constantly significantly all though higher, to restored some continue of were overhead Compared We the last year. of the to essentially been

as employee restoring remaining temporary company's the XXXX, half third are second We the merit which fourth in matching the of additionally and XXXX. increase in reductions, modestly increases such will XXX(k) suspended cost the quarterly and certain quarters of overheads

of its dollars time April remaining majority pandemic concessions were margin recovered, the company ensure these we was reductions customer of to hence imposed bring temporary reductions cost the it allowing gross margin to back and restored, the back employees, on we instituted With right and price Much business the the now on induced contribution that in the of recovery. XXXX. felt

to we contribution are was MISTRAS' to are the appreciative right these And back time our And to success. of things We confident underway. employees' normal. very recovery bring this now is

for income prior-year the diluted net operating period. small recorded loss compared loss in in to share $X.XX period million compared increase second we a or or dramatically year. per the million last bottom Our million $X.X Likewise, $X.XX a in per same net a $X.X the quarter income $XX.X the to to share negative to operating diluted tremendous line, improved

adjusted have demonstrates significant As tight for continued percentage in XXXX the revenue sales the leverage control. flow million and the efforts in or profit and improve quarter quarterly EBITDA history, our in quarter a than was below of of This increase gross best on increase quarter in through EBITDA more last signaled going $XX where harvested of we Last significant of X% from year corresponding million to had a the a in for second in we working our million flow. full second ever it model gross expense $XX QX adjusted was year This business five-year quarter operating was us there a quarter. increase company's was expanded calibration year, our in $X.X year. cash only XX.X%. we the positive Accordingly, million. drop the to from first capital, to cash particularly this fund growth margin a careful expect that both were and the whereas In to was $X.X to in result second at quarter revenue the we the operations best receivable accounts as temporary quarter, effect our ago, record cash quarter, in a the highest receivable, Cash overhead higher, overhead, when flow. second free flow we continuing accounts and free contrast dragging the this revenue generated required

$XXX.X a million, XXXX. we still down be net little as despite the our by million Capital well capital However, expected, the the cash, expect attributable first reduced year conversion of anticipate historical the million items we full is one-time what million through which below June, this payroll This year estimate repayment half be the approximately these debt of $XX.X a tax deferral, XX% $XX EBITDA. the uses of free EBITDA of rate targeted the of year of cash year. of Hence, running CARES adjusted expenditures to last first have for of six is for later range. the At to our for good increased XX% a ahead $XX $XXX will end due expenditures debt as this flow to our XXXX is year. was million months of below of as adjusted percentage conversion of in of to effect such of are goal. to long-term Act total the Nevertheless, rate the but average

what several we strong to further in to executed our credit expand consider upon included banker. Let a us. improvements from me be take minute for May This mentioned XXXX. what earlier, endorsement That Dennis is our a revised significant agreement amendment

rate of First, more the XX the our be the as reduction minimum in LIBOR X% used with previous LIBOR floor. XX X% today, floor. X.X% this a revised removes And than actual agreement interest. day relative rate the to represents basis Instead, calculate borrowing to will at

drop ratio, our cost our in effective reduction back which our and approximately floor, rate. leverage our nearly point in margins grid XXX margin commenced of test. previous additional quarter, debt third with the the May, through have debt of nor a more do existing interest a don't old academic debt. $X excluded outstanding grid of we each from At X.XX are plus X.X% actually rate commencing from junior ratio X.X% of dropping the we X XXXX, times someone and, and rate in with only current prospectively This not anticipating leverage consolidated currently interest comply June But in LIBOR million been such. we consolidated below we savings have base importantly, junior but this as quarter rather expense. only XX debt thereafter. the level, on under the include than in pricing XX, compliance funded the plus June LIBOR leverage XXXX, since were our removal debt lowers of now were which pricing Secondly, interest this to X.XX% X.X%. is to Coupled end leverage since we ratio unchanged, the as leverage total represents XXXX, junior At which leverage ratio an basis lower in is LIBOR moved but of thirdly, would this annualized based is to to in XX, And all therefore, X.X are debt, debt March now is we the times borrowing LIBOR

perceive any will deleveraging, coupled revised our do with business million we the a foresee compliance as not do Again, being we hindrance that continued our expense issues, this plan. next to $X four interest reduce So, per at $X.XX on agreement, interest this to we estimate diluted positive by On on approximately an the have growth assumed initiatives in covenant not and after such our executing in the would and through basis, burden be an share an development tax terms. rate, up reduced flexible resources approximately quarters. additional tax invest Consequently, frees XX% basis. more annualized nor

it reiterate, stated amortization, term with do commitment repayment terms what these However, require agreement does our and otherwise I a level debt. earlier, favorable Dennis have reducing plans not although of higher consistent slightly to as more been. Actually, prior our the would revised is debt change loan

did This fees. the of maintaining size Lastly, reduce use the while us commitment saves revolver we required liquidity. some additionally

Turning to XX.X% the favorably rate quarter thus second for of impacting were the far discrete tax was tax rate, our rate consolidated this year. effective benefits XXXX. the There

So XXXX. an the of XX% of closer rate we effective for anticipate to half second

and in As largest this In two generated outpaced operating turn growth. Dennis we and Products losses International our increase consolidated oil also while of quarter. actually the XX% Systems gas a International, and XX% markets, year-ago income in each up our except XX% and and now were operating up from comprising in segments of revenues quarter. Revenues into growth this both with mentioned, end Services, aerospace, income, the in Services operating segments, revenues total in our

are From space to perspectives, energy year, expect balance year-over-year. of more strong truly all for except revenues quarter. robustly growing the with somewhat the aerospace outstanding throughout sector recovering slowly, an it remain was where We the

with fund to revised growth in will our financial additional much we stronger provide which addition, position agreement, our In credit resources a are initiatives.

was business in of recovering results. been XXXX, to outlook over past the XXXX quarter financial experienced four our effect the low for when our third we the second of COVID-XX quarter impactful of most the has quarters the our from Regarding

pandemic currently COVID-XX market, to significantly prices and are being continues Although largest our energy the impact ongoing demand that aerospace. second stable,

in a quarter but third to XXXX increase low sequentially of year of period, the than remaining expected mid-teens but stay This timely outlook, vaccine and Adjusted macroeconomic restored to ability of and remainder mandates third effective critical could being which crude oil new rebound now including to revenue XXXX the percentage to from all quarter. prior-year XXXX. quarter of pandemic, provider. the resulting expect in cautiously as market at set is the over an the temporary COVID-XX we variants, COVID-XX increased stabilization of contingent ability on than reduction cost from the to as not home demonstrated prior the quarter the measures quickly have higher no second impact of Throughout EBITDA out is to stability, throughout to all be stage our to increased We of in in the opportunities. XXXX and roll emerging lower spread the on a a markets, due of adapt the quarter substantially work or during XXXX well and as results, of third to the course, for also just we XXXX as capitalize MISTRAS' service continuing challenging recover, immediate

That And move to over both to will questions. back the to and long your on exciting As half our we And I turn up executing in is Dennis remain very the highly we wrap our intense today by to business call are our to invest continuing be before the journey. on term. the business. that, forward for now plans our we of continue and focus take sustainable, maintaining that robust over XXXX, with look strategy will model his we to a it prudently second cost and confident containment, is committed while firmly

Dennis Bertolotti

Ed. Thanks,

of we planning the oil stages from to recover the both our So, in recap, the market growth. off for in we fall next experienced pandemic as are and XXXX,

of half and their gradual more will the us recovery. first solid has believe back on markets we a The year footing continue

level that while been revenue. to the improving trajectory operating MISTRAS Our returning over exiting reducing and on approximate of can has second steady the year end focus have debt. here, XXXX. our that of XXXX, with the we growth of the leverage we rate run already also goal generated quarterly has quarter to years, And in From revenues this that attained

in currently winning to share are are beyond Although new And cyclical they the our contracts continuing focused services market energy generation, stable are on gain OneSuite. markets, we power direct and with both data and and expanding particularly control, rebounding. gas via mechanical services, oil and and our and

about we flex complementary can't support. We energy, by adjacent control offerings. are the very to competencies alternative This wind. such utilizing into markets, have efforts renewable our largely will area aerospace focusing realigning space an industries continue are how is particularly and our to agnostic support we And as into our This as that similar sectors we Nadcap-certified mechanical and core such Again, core Emission flexing Acoustic our work. for into labs of of existing to our future. into and growth of In how ESG value our investments, focus today primary has will markets. capabilities many S ways, the proposition. continue MISTRAS which higher sectors for our for OneSuite legacy on and to particularly is yet E and certainly safety, the we increasing customers' value another compliance, ROI the is especially the customers always while continue of the illustration environmental is enhance our into

speaking SES which implemented our For chartering our safety. that the recently level what safety, your and helping once for of initiative as leadership we is Committee, board crisis. taking new for function again employees understanding in MISTRAS, paramount for and was so questions, a would stands this to like the before do safety us environmental customers to all known social, through MISTRAS thank shown I And the your

By for only sticking to safety, on service our You customer during our on and have a tenets building all solid family, better Caring all shown outstanding while and of trying work these the safe those focus providing reputation workplace for unwavering times. and extremely the innovation, Connects positive provide but quality please phone can whom not an MISTRAS dedication we up lines. for Olivia, manner. with open the initiative, on a we

Operator

with from first Bank line And [Operator of the our America. coming Andrew Instructions]. of Obin question

David Ridley-Lane

for higher Ridley-Lane the about assuming understand Obin. you'll the Can second gross and cost pass-through lower half? David half. have – pass-through the second some margins about I headwinds as tailwinds a is costs in Andrew on talk think you bit you little This to or

kind underlying trying to understand seeing. Just improvement offsets if of you're that the

Dennis Bertolotti

back or David, up. that, with start me I'll Ed let Jon So, and

through. because You're bit probably part how right third a a half through. XXXX, much doing. quarters, reduced increased the a expense and the they're now little to while bit about about pass big cautious customers savings pass all are of still extra That But was travel a a some the quite we in being much in about how really right of

as foresee to So, the of as all their half second that like far really I don't goes. travel XXXX and XXXX look

there. being and still think much sales mix there's picking are I customers mix how cost an work some – way we cautious how expenses up. our we're and we on sales goods flowing. So, say savings watching what our And more with work easy And that to we're is our of are

I we're it of some think to see but that. different, keep little where a going don't be able So, bit we've going to below I be It'll been.

I grow think we can hold it and from there.

Jonathan Wolk

It's Jon. I echo Dennis' comments.

similar. be bit a the Margins tends for think I think little lower. QX. to a may to QX quarter in for margin be us. should strong be say sequentially, revenue again tends rebound QX, that I'd I versus It QX

Dennis there. year prior as of that Compared some to is typical year, have more what in you we'll this more at levels. the costs, pass-through highlighted So, seasonality in think of terms have business I

quite about So, good the margin reach profile. may margin prior-year good not still we gross we feel at but about We levels, this our feel volumes point.

therefore, be healthy. think so, I margins And should

David Ridley-Lane

availability in reports labor topics One the also has that's wage many been some earnings of of the other and come pressures. up

are Thank fronts? you what seeing those you. on So,

Dennis Bertolotti

Jon I'll take then it and in. jump let

Consequently, for reduce COVID through there. we employees. focus to of trying them the keep Most other peak it. do than So, hours, our they were keep work, what stayed to we the less more could of If our have are to and off COVID places anything to during technician them our them still returned. did base take strong a would find customers were doing. we we We trying not of do bulk some us to during would the what with are we employees working to but try

or always type So, the be needed area things any skill overall as work. the certain labor use of There's far other. sets problem technology as handle to type some one more of of going have you to than where a we don't for hard

there's that our in have as as really have So, many some as pre-COVID we worked as post. exceeded needs shape believe overall, we're capabilities. there hours good individual always far them But may be we we as We bodies. just haven't total

and increases, some far adjust to find ways labor, have areas, that, as those will in us and they're have going realize skill As again, to certain sets to other accordingly. for certain customers

them we willing And find so to do so. far,

David Ridley-Lane

strong results. the Congratulations on

Operator

next Our Capital. question from Sean Eastman KeyBanc coming the line with art

Alex Dwyer

on Sean. on the This is for strong quarter. Alex Congrats

First a clear season? next fall your push oil later, uncertainty the And quarter. that's and for recovered like? expectation that is one has than season visibility what's your as long historical for turnaround spring this me. Revenue there's if gas What started still longer the spring? and ran XX% that just doesn't just growth season of It's wondering with levels run around And but a norms. segment year into activity out I'm turnaround as the or nicely. turnaround

Dennis Bertolotti

save I any try to in some the first customers question. doubt great a half money think XXXX. It's there's of don't

or of as hours. most dollars many way part, there make was a that couple turnaround maybe to traveling was savings, every if either on a scheduled per diem, the For happened, but not

bit were I fall, probably putting aggressive just had are the spending try harvest – COVID, like don't X/XXs, and savings anything half. might days. work some back the logical. I We same a in working a to But seen to turnaround or you'll think, it back. pre-COVID. hours. that weeks was little of. COVID as was we It unheard hour During maybe in they more don't wasn't but back They're like at some get seen you've think customers in XX of you which overtime, during those amount the not

So, most I too out not the much see work savings, into for but could they're XXXX. this of some part, pushing year current

happen fall. can. to to trying I this they're happen what turnaround second I year, the in last trying much that just years doubt they think the happened what I or room the but is think stronger look the could what where have do have half so that. pushing never for one-off XXXX, probably you save make customers Traditionally, will something spring keep know than same. to up They're they out. probably wouldn't like season, But things would that with don't few been the

Alex Dwyer

Second petchem, did of is perform quarter driving strength upstream maybe been one, these just between those weaker? the out smaller, have compared is energy maybe if all and to midstream, your break and how oil I'm sectors maybe the you which downstream, think what and and during business which wondering quarter? we gas last

Dennis Bertolotti

to want there. Jon, the if you into details get

Jonathan Wolk

for market us, gain biggest us, I gas we've think QX seen resumption share But more to echoing in comments, driven. Dennis's in the really patterns. normalized was more and a oil for

As we we staffed picked up we up. some new awarded contracts that were business, some

that recover. extent has to us, we to the yet expected not really For downstream recovered

say it to levels what and I the in think mostly run was I'll a cautiousness predict. always uncertainty market, we that still echo that, in Dennis' hard QX, have I'd haven't XXXX spending comments and they because But resumed they're they share short seen in there's market to in run gains. turnarounds would yet, long, there's

it Secondly, to activity that were to normal. resumption approach starting levels was

bit yet, But it's I a way think, the strong on it's we're and back. cautious certainly, downstream, offshore.

Dennis Bertolotti

close whatever there's I last guess in Alex where I'll to is And breakouts still upstream like COVID a remote you area, a add is, there things been has about it. that. there, still still Jon's on – the you're to argue some worry and or however camps COVID. it's we on it one So, in still want rig worry we or Right? about closed in total, offshore camps thing and comment

So safety bit safety just and operations. in still about those COVID it little a there, of concern there's feels, of personnel

Operator

Next coming of Russo from Sidoti. the question Brian with line

Brian Russo

quarter forward back? rate your going variable the run are commented like something There's the SG&A looks you're XXXX what cost sustained of rate. SG&A on Should or discussion that assume that run of first we what's a of outside you there savings lot and adding pre-pandemic

Edward Prajzner

There'll cost outs be sustained. be that'll some

could level. won't not we – rebound, So, exactly but rebound revenues to cost XXXX

as of exclusive look That up, quarter, the G&A. fourth back this but million million is approaching creep $XX and the R&D in be quarter. fully to $XX we cost-outs going you back came at If said, quarter, current SG&A,

So, a forward million its to million, and to maybe the peak current half going another is levels. grow million going $XX

capping of itself around can out and think at sustaining there maybe you So, point. that it

Some of sustained. the stay measures will cost

to saw you forward. forward. million same maybe increase that, going We quarter level. last go don't can under bit up going $X stay yeah, the up hopefully a yeah, to that But, more So, this back will run quarter intend the versus we half go year, of rate little we XXXX

Brian Russo

leverage solid the be you half Or of are still end targeting given do results, by debt with the or And think XXXX? accelerated? to X first that could your you commitment reduction, less times

Edward Prajzner

the end than we'd Hopefully, the By then certainly, of X.X. be XXXX, a end at of the year. sooner

going we're yeah, on definitely debt. to keep our focus reducing So,

absolutely is target goal. that yeah, So, our still Yep.

Brian Russo

mentioned if in Or Is that Correct that top earlier, be want end run some you there margin you'll run but be wrong, by may commentary rate run clear rate, the me release that. I that – this to just the was press XXXX. but a have on of XXXX, and a of rate? I'm is line a on think

Edward Prajzner

revenue referring were the We to rate. run

well, if rate rate level. the exiting bit holds would and quarter better. revenue we little not being fourth year at exit feeling exited how run revenue end to like year, of referring exited we rate XXXX. would everything up we much else run this run how it's is the be run we rate this exiting Coincidentally, XXXX where we margins at revenue Hopefully, the quarter, said very revenue as were this XXXX. the But a year in So, the same

Brian Russo

margins, XXXX characterize, top a to or to income summarize EBITDA run operating to going correct? line rate, you're but So, meaningfully at type be and higher

Dennis Bertolotti

But Cost-outs weren't XXXX. all yeah. XXXX. covered have You in be have in cost then, similar, you'll outs, here should

little more the but So, a we the plays of controlled dynamics be relative that Hopefully, obviously are than gross to were yes, XXXX. year efficient on margins a at your in mix this overhead side. Mix be well, time. very that part should will similar. Overheads margin

but bit lucky. variable we're a little be should comparable. a of if that's stronger, Hopefully, very So, a

Brian Russo

XQ comments top isn't mid-teens your that in given the all percentage low recovering line that to really then, increase yet. And by XXXX versus aerospace is the energy just driven period, year-ago

Jonathan Wolk

slightly on commercial sectors the back first up for it's portion of be burn half arrow second this space. it's much this say – to and There's been higher energy, energy by to tick second But really good half far comments, is point. quarter commercial aerospace, Dennis other look are the second too. it's half And year. We driven this and to middle slow energy. the in it's emphasis all of the is beyond for so I'd We half. the year strong and in But in his next starting doing to to of the of well, levels. Energy revenues. a continue in. But a anticipate starting not of at it's third majority alluded with growth still also, space, edge to the which year, as

Brian Russo

just Then mix you've business? on little overall private emerging see margin. you in as over percentage markets currently and and contributing to revenue renewables of the terms space, years headed several next mentioned, of do Where your very that of the

Dennis Bertolotti

by for and things on foot such we like business. we're that there. oil alternatives do. oil a we growth to infrastructure, to gas. all four and is or in reducing be out portion there's and We such as our gas can at believe to alternatives And saying focusing letting But that we'd as of room lot of five all wind, start our off pedal not want years, XX/XX the look are on these the we When below gas

in going year and be path. more year But next looking eventually, we and growth, follow that fifth the diversification and can it's get to and third out. we'll purposeful at or back to fourth organic the Over so, being

years But things going our oil keeping and portfolio. just on focusing XX%. by to be strongly probably gas, we those that below while couple Next not to still and of years, over are we're gas be see oil in five in

Brian Russo

then the monitoring support. it, are the sensor X land. ones wind on that? imagine given you're that opportunity said, the gaining that and and lastly you pursuing East And turbines more Just climate, would that on nearly federal in big and on. and erosion on detection the wind on there's thoughts Any tear. Offshore wind these services times market momentum. would that you the to given is be as to I wear and air are products Coast. lot working there's a just for Utilities a be especially Like got higher X

Dennis Bertolotti

We're absolutely or miles Jon how thing you the capability, the a Sea in the the Because both do Jersey, Brian, we're but to is you these but can of better off I'll middle we to one That many wherever up. let think else is we want answer running of Jon answer it, wind. capability. coast promoting sensing about remote kind North they let new think what remote doing, places put the want we're on into I'll right? thinking of

Jonathan Wolk

turbine located. sensing remote works our said, just Dennis As wherever is a capability wind

wind the so, offshore, you're Iowa, is, if access the Texas to very turbines in wind farm these happen in doesn't the or it frequently. And country great or especially that in a of thing in if is is, the you're is middle thing and difficult

time. our the all remote it's is sensing on thing the about So, capability great

So, it for of you're hubs, wind rotational condition inspecting can the or parts wind time you other turbine on whenever the get even turbine blades that time of to beholden to you're your the wind not kind a where basis all intervals some of matter, turbine. your

is if occurs proposition is on imagine, more damage your so value you frequent because can the And even access to basis. offshore, stronger, a So, difficult. point,

yes, to question. So, definite that's here answer yes a your

Operator

question our Mitchell the next And Company. & from of Pinheiro coming Sturdivant line with

Mitchell Pinheiro

from And in is revenue really driving environment your understand report to understand a helpful hard me up basis. And energy the as aerospace now a of really longer-term to I step and sort wanted pent growth to It's for such It's a not moving of last everything. bit. disruptive for demand I this understand me what's part. the sort understand for you the I the XX months. way just back parts been

revenue going how energy going really in understand next of terms not be Are can you XXXX, or through see it's six composition we'll that brand your us talk understand we in big growth about all to view? things talk can markets growth end look from year Your be can and tangible build going I next in How and ask next markets for that monitoring, I'm of the I normal For I a incremental instance, year, months like, to year OneSuite? sort to we not new question the rate alternative environment. you year As do incremental to can some we that the if of boost about it's bit properly, sure online is next mechanical, out, little but a the about, see a monitoring build. of year? in talk it's revenue, don't maintenance of a and rate business point going you initiatives? –

Dennis Bertolotti

gas, and our that going I'd customers say for in things it of to segments of out are to are Jon. strong, you're our out couple this. But Mitch, and COVID, reliable, of are that to we're maybe might came a like at easier more The folks ways do, aerospace and saying, let me segments one for the looking owners segments be comments it make in throw forward. because quick before of different representing But that I of looking that is, oil maybe vendors here. going all

and project the their on steps for You to the more take control handicapped all funding these it be before prepare doing on really is our has to about the it more all very contract these in five-year preparation to steps, technology. about – of give when talking a dysfunctional can And inspections. can we not lot there customers. very, we're back these a cost. time growth may don't who we and simple every be vendor crossover may of to consuming be and or a And be our after we after want talk and put able some we either for services, or work And

that to the for going not because he canvas technology and that who's But see for throw the term to of times T&M someone to hourly that done job so doing. than the growing longer efficiently cost we market. segments get more recovery Jon any sitting crossover I'll total So, sees. our things trying we're on one things and we a waiting in of partner COVID the some of people using it the containment, thing. We're services because of all see XX and/or really better cost different run them to be many is having

Jonathan Wolk

needs of and job that an That's the is thing the on a are they I of, a technicians, not replacing with do model both investment on convergence start we thing get inspection, it's we different instance, which do. one I've or all displacing on that can ourselves perfect And job. essentially effective this in essentially, not purchasing just to mechanical doing time, very in renewable be services and services, been points them the partly the It's to. Mitch, for on this reduce rates, and access alternatives in ground they owner, in in the personnel, amounts that or ask create reduced we're we rates my compelling sometimes is, combining kinds be and of we're a of great course, it inspection as to a a haven't And that service Is lines I've sector combining the do by for one disciplines get the is, we're scaffolding, doing with convergence realize and alluding scrap department value before, disciplines, not of certified different it's activities that lowest setup. the monitoring just they for it's customers parts But convergence of to true. if business aerospace doing an that accessing to with And a group convergence able to ways them remote to it's and to be where can reduce the it multi return way done just the reduce time. bear, owner under for rope ways greater cost, doing sort it of it gives costs Dennis to for cycles, question. mechanical, just in increasing it's along indicated, access space, barely we're reduce thinking proposition, my of mechanical roof that rates, to it that produce for same as their emphasizing, at different again, And that's for and us. just we way, a of innovative and we that employer. recovery to make don't other bring commercial other Dennis great any forms keyed a really that with to results business a have crossover the today,

And to And because that, model So, they Dennis more think, those I increasingly to hard as we're time as to us, do mature, provide try even activities. it's I said, start they and grow over what as sympathize to up we're into to kinds going to of really saying. visibility that. it's more, increasingly

Mitchell Pinheiro

know you do to you whether share of overall and How Obviously, customer's come they just can't you're that hope capturing back your fair a sit you. needs?

out there others? among Is a the faster rate growth that growing these selling You're them. and going services than are

Dennis Bertolotti

Absolutely.

Mitchell Pinheiro

whether year. see to hope have? it's you and can growth things talk help turnarounds seeing hard revenue one model. length can is higher Or we that, in can understand that, contracts, but I rates just Are Is I'm wins build it just and and part there call sales digital about, that and That's visibility see there we question clearly – about is, after call in understand talk sales contracts, but how like hard build like the a turnarounds so how of the revenue? help you will, in next literally you new growth builds is of little sure to solution, revenue I to they – we can need us my it another the it's things also tablets? the

Jonathan Wolk

bit a of honest. It's little both, be to

In with day measure, terms we're in how with and the out. customer, them working doing we're we how of day

and ourselves we've performance We indicators with working and their at with all working feedback how you grade we're understand out got getting can technicians operational the sites, sites, We're key reporting imagine, folks customers time. were our regularly that at customers cetera. As to our the performing. at their et our customers with

So, that's how we're we're doing that gauging how and the answer to that with customers of part of kind that's question. the we're measuring how

absolutely. terms the where of In from, comes growth it and

called remarks in that were prepared mentioned Some up sort these aspects, talking the but these a where you to out the goes we into it of year, many in from, and small year, that's we've the where terms right. of areas we're adoption our now, of tablets, by the base Dennis of of of And already the areas and it talking would hockey our of hope, the about. going where goes why course, we're is it excited started right great about really like we of next comments. end where was relatively stick emphasis. The the importantly, we're if looks, in Q&A that about as MISTRAS digital you that show right questions, some in chart Digital them of now

we're in we're gas, that addition are right on the as pulling not and a said, share to data through that ready monitoring renewable resegmentation all to market. But analysis. going commercial As of my is actively forth, emphasizing aerospace, and great and Dennis parts really now. space quite these basis as we're that levers sector oil and The to exploring team we're effect these we're – the so

So, about excited we're it. really

Dennis Bertolotti

it into of the getting some working year, already this for Mitch, you the metrics. been resegmentation easy data without internally to we've And guys, later make

in year MISTRAS the the were, start of So, that like we and the tablets have to all running show and we just that bringing the we'll and all that. later adoption out Digital OneSuite and you where

be we So, going that. are to doing

that to always that safety and are using are we the metrics obviously, of showing you're there performance total customers per our first. them by savings, them the do, point the do savings, But The we get doing which to a waste our and asking them. cost time always any their other we're trying improving and selling, whatever showing they our we key indicators, we them customer, our just do there's on actually how our it like there stepping type in showing productivity, measure sell have for where when huge shows power is cost on And we're and things. what things of can tools to Time so the these many trying turnarounds. and how gas other that refiner time them tools over done. a in people they're be out field of just the all job these oil or And for on each were

one improve to be are huge them do to do of you can – going in got savings. that things be measurements metrics Digital absolutely running we us. we're to how to you that we're that for those anything to So, to the there. And translates that's all showing and improvements What growing. show to for We're ways show going them how revenue MISTRAS we've is guys these understand

Operator

Bertolotti any questions. At I'm to Mr. turn showing time. the closing call for to now like I conference remarks. back further over no would this

Dennis Bertolotti

and All call. our time. a right. for day today joining Thanks, in a have look next Olivia. for your we and Please updating safe thank like interest Thank and you. everyone productive I'd to forward to you MISTRAS

Operator

for for your and you gentlemen, Thanks. that conclude participation. conference Ladies does Thank today. our

You disconnect. now may

Mistras (MG) 9 Aug 212021 Q2 Earnings call transcript