MG - Earnings call 3 2023 | Mistras Group, Inc.

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Operator

Thank you for joining Mistras Group's conference call for its third quarter ended September 30, 2023. My name is Michelle, and I will be your event manager today.

We will be accepting questions after management's prepared remarks. Participating on the call from Mistras Group will be Manny Stamatakis, the company's Chairman of the Board and Interim President and Chief Executive Officer; Ed Prajzner, Senior Executive Vice President and Chief Financial Officer.I want to remind everyone that remarks made during this conference call will include forward-looking statements. The company's actual results could differ materially from those projected.

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

Manuel Stamatakis

am improvements expectations of reflect our in achieve quarter. XXXX beyond. we I in today. and my broad Good you strategic Data in in our morning, everyone, Analytical thank another I administrative and Phoenix, to and the performance, sharing of call, for vision a joining only which provided to us general Mistras. believe we help margin Today, about addition while In us the gross Mistras line in I for commercial EBITDA. and expect businesses, reduction for Board's October to which talk the Phoenix.Our Revenues more beginning overview of selling, and Project of were to the revenue quarter it and status adjusted Project EBITDA our margin impact for in as the quarter The want are results up, adjusted expectations our SG&A contracted expanded initial for particularly the and of to blossom. about third Solutions aerospace continue Gross relates growth with expenses with to pleased were future financial

changes cost the with by helped and the services actions into to revenue and to were and headcount, but revenues XXXX, and company's administrative as eliminate through and measures, make Phoenix Phoenix-related we investments and and just margin a to will to growth, single-digit $XX timely initiatives announcement, reduce Project better fiscal other steps to like of supported driven strengthen savings benefits actions completed enable fiscal the margin reshaped highly management plan in execute growth contribute Project and company, be meaningful I end will to as and important expect Phoenix's accelerate targeted leading Project leadership additional growth robust organization still as a growth, and operations strategic, by positions. that contribution are support as by the reinvest primarily team. meaningful to to these motivated, a identifying material this senior as Phoenix benefit going would instituted including and impacting we in later. of more company as XXXX. savings, associated team that reduce our with profitable confident offset us the with slight savings. adjusted to nearly sustain XX, improve Ed customers.Together which XXXX to to and other associated improve the initiatives increase, viewed reflect growth initiatives press and its Phoenix.In skilled, The release forward.While to Phoenix initiatives be to to Board ability from going of provide has further goal total am of total Project conjunction of the improvement XXXX, and EBITDA changes forward. As not implemented, or also million. redundancy crucial the softness is in Project technician efficiency Project These am XX% was help opportunities revenue announced the we more $XX XX% approximately well a reduction Project in committed the our base details yesterday Project invigorated moving results the and of moment be rationalization that savings year-to-date profitable million growth initiatives accompanying workforce, profitability on project make improvements some September I income profitability But and reactive EBITDA achieve also of sustained we on into key of to that previous efficiency. will take operations XXXX, the XX% of without gross Project accelerate Phoenix Equally to will cost the to first, in the XXXX to overhead should by to Phoenix plan as with waste forward. to sales adversely a greater proactive, of the result reflect with will a behavioral at margin sustained low Phoenix discipline, in earnings profit overhead EBITDA to this overall brought expect company.I controls These accountability, SG&A target in is energy pleased that experienced by leadership all-time juncture, than separate decided a senior to the and company to company subsequent high a the expansion our senior we the approximately

future over real Phoenix. implementation of behalf his results the the our the update call that more to Board, of recent for and little our initiatives on to turn these for the like am value on I'd for of a shareholders.Now believe will company on and the Ed Project Speaking optimistic I create detail

Edward Prajzner

highlighting another morning, good fundamentally change change Thank Mistras. increase will significant progress before Phoenix was let Project our changes, significantly It some for meaningful and value. these shareholder company provide But you, and the And for Manny, quarter quarter. and me everyone. of highlights

as compared quarter basis, XXX somewhat XXXX. energy from and the quarter also primarily a the costs sequentially and XXXX, down by expenses, to by gas, a sequential several aerospace our were primarily pressures, I driven sales was XX% and note strong and Data Solutions. also also revenue in and market including points driven volume.Gross second growth commercial profit up turnaround third For defense reflecting were continued XX addition and basis lower that aerospace to by healthcare incremental and in growth would slightly, oil XXXX inflationary costs. down revenue quarter was Selling, administrative year general key up initiatives, mix offset increased consolidated Analytical and quarter, up of a on was the favorable expanded points International prior to margin segment quarter rising strength and the expenses subcontractor of particularly third in in X% primarily X.X% compared in of our the basis of

million the diluted related XX% savings.Loss when Manny goodwill operations $XX.X per impact $X.XX attributable The third million As aforementioned in impairment to and adjusted quarter third factors to to as on $XX.X basis $XX.X minutes.Net reorganization same net related was was for the impact quarter Europe, impairment in before the largely prior income a year income charge Phoenix quarter segment, compared to our items, and loss items a yet $X.XX quarter. million item for charge up on to the of or decrease on detail negative of before from costs ongoing $X.X and largely was in EBITDA our the operations earlier, Net Phoenix a Project special represents loss million, period. this of with Project few million share of associated $X.X will mentioned the million, non-GAAP consideration controls International to in a sustained income XX.X% while prospective non-cash operations the diluted special reflects I $XX.X expectations. macroeconomic related overhead excluding benefits. other aforementioned share, cost basis, for for non-GAAP Phoenix. of excluding or achieve a adjusting increase meeting this any the more from was quarter, per The the provide before items, the from Project non-GAAP was the

flow, in September the XX, in $X.X quarter the the Our increase operating impacting to million capital revenue the $XXX.X $XX.X $XX.X as an in net million by 'XX negative XX, 'XX for of compared X growth.Gross attributable was prior flow primarily X receivable cash million the projects of was accounts to ended June in of capital expenditures as positive Solutions the XXXX to prior due for of and September year in million year Free during $X.X by of September higher primarily to Analytical the current reflects cash year as normal and in from to year was to debt balances future period. factors months cash million offerings during period. free current $XX.X to decrease Data XX, provided than million the months compared $X.X due This increase increased first cash flow. aforementioned first $XXX.X of our cash expenditures timing million activities laboratories This in third shop the XX, million the investments in foster during quarter. flow,

operations. Accordingly, achieved trailing ratio expectation costs inflationary from XX, was that early back rising being our lower in result leverage fiscal September December in to as quarter international of are I the charge target Our impacting under $XX.X the 'XX to margin reporting referenced period XX. of incurred achieve 'XX.As current as or we decreased leverage of X.X:X to impairment earlier, of a XX-month units gross non-cash in our an and a we of due pushing bank-defined million our energy timetable just a X:X pressures previous

gross performed rates $XX.X a caused to unit third business. which interest quarter decrease within decreased This in reporting which impairment to this result, unfavorable an value, margin, recorded of impairment the International current of during of was the the our we charge this XXXX. in addition period, goodwill contributed As segment higher million, test an in interim quantitative

organizational both by and months Excluding our from year, severance X will we this Products that growth to despite is structure. Data growth our experiencing segment of Analytical included a Phoenix, the detail September operating and improvements information, and professional as which benefit recorded the providing of with back data for of $X.X brief we analytical achieved the ended charge, continued pricing on achieved the Project and I actionable 'XX, our experienced experienced strong productivity has QX turn implemented on a reorganizational believe facility are benefit data cost of positive and transformation throughout made let follows. the use additional can charges to far also revenue, in X provides their overview their prior beyond details October initiatives, growth impairment which million period.We relate being growth quarter the segment caused more fees which now Solutions In budgets. little this to data our Systems of comparable highlight headwind charges provide XXXX, this the and to part actions our months safety, nearly Xnd.Before through procedures, maximize well certain this all during strong during Project cost non-GAAP be EBITDA costs are they've third optimistic and in the business like as associated of for XXXX, announced XX, XXXX XX% would income optimize But the with of quarter impairment, and operators International. with as customer over year taken enhance significant in for for me restructuring which Phoenix.A also turns and Project International into customers on associated thus non-cash Phoenix economic will positive this these as as and changes non-cash The

This is costs pricing, commercial inflationary address experienced function earlier. the strategy First we of is price Phoenix, wherein within being developed and have proactive will enhance which a structural we business. to strategic mentioned our Project further

from million anticipate to significant support fiscal through to to our as to of of Project now Secondly, a to a or million Phoenix Project ultimate however, of operating the from bottom-line a in meaningful of of technician goal buildup million delineated this was provides attributable without our incurred fiscal incurrence to end to leverage free Phoenix, alluded our take initiatives, of a revenue drive which profitable the This strengthen call in After significant lowering EBITDA than and is Project being revenue growth million certain in help cash we our increase and all-time cost $XX fourth expenses of to lesser anticipate And and this million range, emerged we to EBITDA to immediate sales with be lower to $XX rationalization or cost goal overhead, comprising guidance growth.We be implementing the ongoing savings adjusted reduction the adverse new XX% increasing and before finally, workforce continued from XXXX, the an growth accelerated benefit Phoenix and primarily Phoenix. the flow, EBITDA incremental results attributable this of its includes and This targeted approximately our an will issued full-year previously of outstanding $XX savings to and forecasted XXXX lowered Manny value the and transformation is range, in being reduce accompanied as profitable overhead the of expected million Phoenix. $XX overhead XXXX, administrative now cash SG&A primarily adjusted in to benefits. with free $XX the 'XX. these the leadership are organization EBITDA over Phoenix.We had organic between which $XX to cash million cash by flow improve earnings $XX your company expect the in to new shareholder outlook expansion million $XXX due due now million ranges combined to a foster are are to shareholder from guidance previously million, total $XX sustained revenue and a from quarter for also reduction operations growth a revenue a achieve flow in $XXX to service operating reduction overheads, a senior the day excluded $XXX Manny within leading increased between More adjusted which to separate base EBITDA from reduction for to in for his in cash reward would a million expenses your arising Manny Project expect to the are time, $X have improving leadership expected million Project adjusted results.Free approximately than benefits enhance impacting said, AR to cost by and which revenue like to guidance reduction support Project yet patients capital modest your initiatives with in greater various significantly made questions. generate a increased previous we expenditures million press single-digit I of $XXX previous Accordingly, record to we leverage to XXXX.At savings, ability many to detail The recent range. between the closing and Phoenix plan immediately, extent, the was growth. implemented and Project execution workforce, to in part a driving revenue of remarks a headcount the on million further and back is We improved appreciate yielding commercial yesterday, XX% to turn value. customers. move XXXX, focus, including to. as overhead, company's lowering $XX XXXX, the to planning, of and roadmap release, the release in with thorough improvement changes Board growth, achieve

Manuel Stamatakis

management successes further our and us Thanks, allow achieve Ed. will will stabilize confident expand to Project I'm and The objectives. in of implementation business successful areas, growth achieve core and Phoenix these our that

not a return can strategic market, lower-cost results. legacy a share in footprint, through Phoenix yielding of better we anticipate combination an a of and efficiency improvement maintain I business, plan. comprehensive otherwise oil market Project and productivity mature lead our Specifically, pricing while economics and the to that will gas following actions, gain if wherein Stabilization

making initiatives. In in growth XXXX, company addition, the will in be increased investments our key

these and in-line efficient will growth expanding of in technology. all to already Data each pipeline organic we for markets. as of intend a investments growing in and aerospace offerings, our are well in more markets targeting these and presence We invest defense.We rapidly better on demand Through capitalize as the be Analytical our inspection significant to have Solutions strategies, and

proprietary XXX Our software data currently analytical over in analyzing X assets plants. over million is

increase Our CAGR this serving These XX% company's enable of the our XX% history, I management and shareholder actions higher in target to will revenue will confidence turn, by will significantly meaningful pivotal We to believe over better solutions this to be to Mistras' their and in resulting made restore the junctures Mistras am our in will in be has to investors' what execute confident ability sector savings.I'm assets, years. the pleased next create should in at the in is the business pinpoint X to margin customers taken protect most that to lead and when improved the on. preserve one decisions this, very results. actions and value. Board I hope of proven cost

key leading us a Finally, to skill right individual your the ask questions. of as future in lead one 'XX identify the right with with most this for search to the would forward. call I be will this engage and company to engage indicated the sets We near and reinvigorated to our open assist up leadership previously, to to the important plan to time, focuses my operator executive I like objective.At firm

Operator

to Research. [Operator come Instructions] with from And our Sakai question first of the Chris going is line Singular

Chris Sakai

segments on decline ask Industries. to and a was was going there? why the both to those decline there a for wanted ago. there there Power in year what ask like about Process It and wanted QX Transmission Generation there looks & Other I of was I

Edward Prajzner

a of off. long-term That's Sure. dropping one, construction a happening contract, builds I'll recurring that's off that new drop take Chris.

that but particular after, going But, was delayed expected. was those we're new contract been work That exit. in we'll be actually. that. that's actually a project yes, that sunsetting sectors, in replacing We've long-term that a of a with So -- envisioning

Chris Sakai

increase receivable. there? on going in Okay. And was What was there an accounts

Edward Prajzner

bit quarter, is, of third of A we on of the month the that side. the was heavier little quarter timing the end built up Chris, at the invoicing

that projects working a and a place invoicing off we lot timing of of took little So eye maybe when the capital. customer, bit the our took the with

back up back that other issues tighten I to down tighten quarter to the fourth will in that No and improve quarter that anticipate we the in down and capital QX. happened quarter. of that that. there fourth So we real timing the back than the we'll during invoicing need late bring when we working the largely on that. But up in the do was that will Again, tie

Chris Sakai

Okay.

good. for me. what can -- Sounds -- there major was one was -- and you And last for oil What looks comment upstream? on the gas? It your then like were improvements

Edward Prajzner

sectors upstream of Yes, good but us, for is America just there the that Europe. a mean, Chris, and all North quarter. I had That X is good actually, a good X of just board, business flow the volatile the across of least there is It's demand. probably product. there good level

Just business steady flowing. of a volume lot state there,

So there connecting the as cyclical that had other fall strong drilling record the sector lines a sectors, one. they back capillary our plays. that's They in onstream nearly so the the another Midstream. that's of the but quarter that the off largely -- as business to upstream into quarter, is not would where mean, I

actually All no, X were but us. piece sector that in business solid it's we solid, do nice for would of piece very that us. helped But, for a the of upstream So onstream like just have particular. upstream the

Operator

Pinheiro & And come line from next to the Sturdivant Co. question is of going Mitchell with our

Mitchell Pinheiro

Manny, question, for I this guess, you. is a

ago, for -- lot why And board years results urgency What's now business the X and the a COVID. just happening, let's sense the curious over Phoenix has I a stock including it -- Project I'm the more there years because obvious Phoenix of say? maybe bumpy obviously, happened? been several for years XX sort little relevant of price the little now I that why on it mean, in for a reasons, of at last of Mistras been years. You've Project wasn't changes ago? now than X that or is is And mean, there's I'm more made curious Is

Manuel Stamatakis

when had had question, Probably X The better. the reassess that time hoped That's we Mitch. where a as years We come didn't. have whole expenses. our world good felt out it should to changed. COVID were. we -- And ago, think COVID concerns came, we board some would about always but of done I it We was

time hoped wasn't just it I our were bring we coming a And a it Our for it this was not on performing XXXX, money we at to we company. the out it combination point, not ongoing what attacked of it some could opportunities doing, was differently, year, look of felt would. had things in. that might look good SG&A time at at save had year the people been decided COVID, we the think, we now we basis. were we a to done results to but had was an in identify in better that was time, And XXXX been level that It have

decided to XXXX. and optimistic going of things, examining we was we've year that making exactly So rebuilding what XXXX. in that's lot very we're changes, our about done we're a be We're 'XX

Mitchell Pinheiro

are Project talked finding skill right so Phoenix with the to about to I'm get new sets; what right it's and -- in A, that'll this you be So, is curious and know, coming CEO, skill person sort are like, the well a you is here of underway. B, going so person those set,

to for new does you involve beyond sets Phoenix. that the of you so seen in the is the the different it Phoenix going skill the one that the But what would we've CEO, Project things I do guess, Phoenix, Project embarking initiatives? think what And one, are kind skill want? Sometimes Project now new sets would be the have CEO been new executing on CEO

Manuel Stamatakis

understands leadership thinker be In company done. a grow CEO our CEO the accountability, want a person, person work management responsive, going simpler to the and looking skills that has a good to knows the the how a experience, company. team, are the strategic to listener, profitably passion strong We how arena build someone to next that somebody to We for and has navigate public experience and delegate, cohesive, that to knows importantly, we're must when We're confident bring -- ability. find started in, right got or affability, matter it before whether We that. terms, to things Project to do bringing will availability, our have think going get we and Phoenix to got here he next we're after. that or we that not here she hard

thinking, we're So try identify that's to our that's and of we're lot that's effort our and plan, a him. what invest that looking engage going to and for, time to individual

Mitchell Pinheiro

pricing Okay. Generally, couple One, And to related sort other by of then market. Project you about just Phoenix. dictated is things talk is the pricing a strategy.

for are across I prices, lose that. on would the opt higher love you does to willing be can? So board, you -- And I answer going is it to not hear pricing? to don't that I what but guess say where business are raising mean, your I you

Edward Prajzner

sure Look, are years, the you Yes, world the X.X to has rates interest past up. again, is changed I'm would. up, inflation X year

you're we business shortages more that no as and have to have that We nobody to pricing our losing are just still undertaken margins -- a them of We we're make customers us losing hope the be good that We labor incurred develop initiative minimum, our reasonable, that. SG&A, money at believe does our work costs on. that are costs, It and changed, money. accounting to, way we competitive. so we we not make Our believe us where that we that because can with and good for all we sure for lower in need operate can it in that can costs we we we're talent. a to an have, now do have our covering strategic fair and we sure

Mitchell Pinheiro

So this looks talk for guess, And then also From release million And on cost about which be, Phoenix, on -- of relative, correctly, two, at and that incremental $XX would you maybe, one? is investment are Ed. for cash Project what to a $XX lot Project -- where is estimated investment basis, updating improvements? you're what Do related Phoenix, I like of the what SG&A, separate will SG&A that, when savings. savings, looking what offset to a free I press okay. these cost savings that million SG&A, are was a that dollars number read number be can share? that are you spent cash are flow of you the Did have figure -- the the a going I maybe dollars

Edward Prajzner

And Yes, we of rate run The numbers the million certainly. $XX correctly. is you $X read XXXX, but those which in achieved have million in 'XX.

cost behind is The taken actions to that largely I benefits this before XXXX. has incremental do year-over-year. us. $XX million COGS incurred. benefit That's mean, uplifts. The is SG&A So, been and revenue effort the have been here in

back investment needed largely that's call, behind This overhead XXXX, to not now. to in do incrementally we XX% the additional office that. alluded reduction there So, on is us

there for there's automating do that more We're we confident. incremental to of But, We've and thing effectuate benefit today. needed very not XXXX. us. to our But, a and achieve be really necessary there any automation, savings will but savings very be out all there we're incremental a whole areas. some cost redeploy That's place not the time a the to forward, that's taking that an today. be that to any talking there and That in workflow no, looking fiscal effort that do to that. We're we this. things, was forward diligence is investment will cost in achieve feel that's to a 'XX not that the of entirely spend efficient. achieve in confident going So, no, we're different behind otherwise in of going And not in savings incremental 'XX, is lot about effort laying is business that overhead here true and through a different lot spent reinvestment. is the giving Phoenix you an higher growth Manny may investing topic, whole but

Operator

come next our question with Moore line from Tim to Hutton. And of the EF going is

Timothy Moore

I your want you be reconciling the updated free this Project to for And if lease was, on flow think for one a then or the do on capital flow Phoenix, said just the costs down, working account the to will cash in maybe break be that I might already your free but what of this exact guidance January? are by guidance guidance, year, spent know this just cash going work by end cash year, other of came the costs convert total Ed, towards expect spent receivable, follow-up the that implement collection? cash year. you including part do severance? December to and January end of I like year, the more free more the that you flow you're to had

Edward Prajzner

the that to an to relative door probably about great Well, maybe the first of real costs question probably cash savings. part million or out Project Tim, outflows question. effectuate Yes. the order happen, that's to Phoenix, magnitude, year, this make your that of $X of

that a line in the but sight So in. number earlier, number. guidance that's of that's pretty about now baked good our to was not That we have

able growth achieve, that AR, bit a now, CapEx bill are bringing in as that the point, me region. the will WIP little the in adversely some might to I into AR some of it that to bring will areas, cash that's seen flow, So now hurting that not made but There some in new may higher cash third as a work we going hard slip there's pull Worst are $X higher that new good to it's of also fourth case, in investing that back free cash some mention hard trickle a exceed, here million down down by that down be working is to back down that cash into of where free and yes, I the your flow growth down year-over-year, future AR, the bill quarter. The to in 'XX. off bit. the primarily WIP we're January, that flow working piece the to lead we bring hope XX/XX, free But that's but, if here there. very that's little there. delay QX. we've slightly free that incremental flow. that came revised and Again, hard we can the in the some from yes, investment we're is to us

Timothy Moore

was That giving bridge Great. really helpful, of components. the that

could million or $X it of I Definitely I was that it the project? from out, clearly that Did all million cash one about up to $X up adds What free it investors. flow maybe guidance be makes defense to in I pushed know again, think It really start or that don't half first difference. start is sense. know sales. helps the stop-and-go the year. about up?

Edward Prajzner

see got little that next That's third Unfortunately, back back going more not picking is came the the that's so no, XXXX. online Chris will this reason little still bit. just appreciably delayed. that. That's a back help not -- up that year. go Tim, get kind a back second It have the out not of to no, do bit, appreciably quarter. staffing XXXX. sorry. here in Again, online we a had maybe that online. at We and That's off through it 'XX our back guidance job half of in coming get and of think revenue can occurring, a getting it appreciably But, away, delaying didn't and of half, did is up, We event But why pushed you hoped slowly the point.

Timothy Moore

Manny helpful, the maybe prepared that's my a on Ed. question had last Data And I XX% think, XX% to Solutions. remarks, CAGR. mentioned, Analytical around Yes, is

of it the out quarter, before? it Was goal? Solutions? the September was quarter. don't September lapping Was year, was caused I XX%. If at on sales that right, Data I half in kind might decelerated, that in in good stripping growing, rate it period year And any know growth maybe it target this there you a something the think, have September really lumpiness or with just the OnStream X% first quarter growth math there at the of be below that the because my to look Was the if went anything is

Edward Prajzner

growth The happens not implementation implement alluded it's at big Manny it nature so no, and X a will that any Manny very we and of in right now way climb is is of wants along area software, that the number licenses. to Well, quarter. Manny add Manny on high through piece it I is may said. expand in real, data for just other given we flow There the he of more to on range XX%. defer XX% there. growth that one. any a that It's and I'll But pure it's us will are to ebb let a to linear manner, that want as data color not but that work months, software do that CAGR to there analytics? so

Manuel Stamatakis

but quicker. to get of to which of customer plants identified outside a lot And including service. we plants of brought markets there. want own need and unless growth, customers. of think put, this there This those It and scaling that of would huge into been more a Yes, our -- type we be those plants opportunity helpful software profitable we what all but able to customers. We our now part is be of we our it's solutions the that think going to to think lot these like scale, just for a our a into there's there's to the room a helpful We sector I to exists will we're lot were a are there is very to want don't are to and be focusing get now, have is and our important markets, in it so we're that market do we add that in And to to on base prepared. this. -- in we business our a for able customers own level. very We be to bring that to has is to plan proprietary greater

going focusing answers your more can we and if plants so installations be So to so I multiple this solution. get the XXXX, at that ready question. to with that on time, that into more getting can know we same and scale we're don't do

Timothy Moore

It driver did. solutions did. the It your a in I'm believer data line. top big for

operator. And I'll Ed. to and back the it Manny turn thanks over So

Operator

And Brian as line one move our moment question question. And to next our we of come with from Russo on next is the going to Sidoti.

Brian Russo

I from few a follow-ups, previous questions. Just guess,

The -- control. to appears general. within first your Phoenix on the price Clearly, SG&A be or just in Project completely the

in to which on is in the on there that your of Oil increases question, previous very a North and & competitive Gas, in is visibility But good. XXXX I just But customers it follow-up to Feel focused where lot price terms that for might and have of defense, table. to that's disagree. might needed that increases entry, higher to seems where expertise free barriers you unique a more brings the pretty American price in a So market. the majority think, was of be the palatable given Mistras aerospace specifically operations certifications

Project gross benefit for Just Phoenix get which increases, sense your better in in I category and/or for a trying revenue price falls XXXX? profit the to assume

Edward Prajzner

Okay, yes.

is what obviously the KPI customer, where great ties we fair understand there that. Obviously, all is for increases a are and about given more making lot our the should, a to a be one-size-fits-all matter more going about all value after our But more many increases demonstrate approach year. recognizes business mean, of is can't any price to go structure, us. get for and not just of push there versus right it's a more solutions of of they a routine our price our new That's we value our that, reactive. to you're partnerships we this A it customer commercial the with necessarily get into But to that. KPIs, So from have of efforts really really connectivity, of we right, have customers the proactive to value here. as and sure fully not policy, Brian, all is the here to do Data are I getting a customer. here here customers that true illustrate to technicians but bringing that, that sectors.

crawlers, robotic other whether capabilities customer that many more to And customers, are for to use be We many it's the and are efficiently their base. efficient, asset in software, effectively, safely, we investing capabilities. help more doing

So there. about and a it's making sure all return that getting all that's connected fair

are partnership efficiency, give them. offering return. we we're we're investment effectiveness, requires with more more after. that's and a wherein dialogue It's getting productivity going So -- what the from the more customer really and fair holistic a They it's winning. and more That discussion, where both

it's we're of here, having and we're it recent us a there, a is each want transparency what that's and growth and with do. has going that and a -- a investment year. there's to there we're to reactive dialogue. again, a we're really the discussions where dialogue it of needed, is routinely fair, And thing think we that's because I that's payback a not times. with policy and kind So meaningful, there having think it in customers. after. we after more part do important discussion, it is I I huge it's That's conversations routine -- that's of a where going think make in And more for what as been Make process, That's proactive we thing and what where

its of So why in that's in holistic really pricing sense. we're on more focusing aspect this particular

Manuel Stamatakis

And taking to we just just that have to add strategically to. that, to make of already want add that to that, agreed to we've increases sure we already the -- advantage price been agreed full that are

approach of making -- So taking secondly, we as We costs increases through that are have costs provide There's to sure down increase. many as paid the we make to and question we And sure and make be we they then we of It no sure our is do is the understanding But standardized, business. business. renew we're to and about we've sit that want competitive to do to want what a full value, it. all we talk a customers clear fairly. our want pass all that comprehensive been have advantage of certain of to. our to us arrangements a already agreed have allow already

as of taking been a going problematic. to agreed sure lot And think is that's making it of So already what's we're I advantage don't be to.

our -- intention the just That we're The across taking prices we've impression here the that already take sure the been not And to anybody that. have it here. I then price been strategic. we're of raise word it's our already to want So key give isn't to first all don't advantage focus the beyond and board. make is going -- to and initial is increases agreed

Brian Russo

Got it.

reduced free flow year? And maybe given that Xx for that leverage Ed, reach on market cash focused outlook the been Okay. this for has the you then target unable are XXXX, to

Edward Prajzner

of we're weaker had maybe as we yes. That that a that prepared X hoped -- X-X right 'XX. We But due -- free the flow. little said early that remarks, in to one just relatively got now. XX/XX. slip to in it out pushed part quarter below going achieve was a We're below Yes. get cash out, to by we'll the That's

still will get We X, below a yes.

Brian Russo

XX%. of your cash reasonable historically, And in Is kind nearly that Okay, a been great. has conversion XXXX? assumption

Edward Prajzner

it forward, a Yes. of yes. little is. been a fair is quarter, use I this for mean, I every year believe But, to in number going reasons conversion, I yes, years. do that XX%, no, couple but our but not over past a longer higher has the given good than term, growing still think believe CapEx a it we that XX%

Brian Russo

the apologize great. what Okay, earlier, this I And missed new CapEx but rate? is I if run then

Edward Prajzner

we'll little teens there little is we're to of do has been how years. the little probably shop to labs if year to XX%, -- investment this be been expand operated bit. we to than little going a mean, at a quick It's our it's up do at we've I with which our mid much -- higher higher Well, couple -- going more end the good a high determined. forward. last up function value-add, XX%, It's want million a which hurdles, paybacks, really of in and have We'll a meeting ROI has

of to X.XX% drift up to So X.XX% might revenue. X% revenue X%, X.X% the of and

leaving to that next up we're spring flexibility So a year. little

good was year. we'll in may our have than same be in some plans. year, the be a higher little a capital next for not modestly next more but the a our may but little bit this have out But a It yet little in for number CapEx might capital next for bit data yet to our right for at just and particular this to business invest it shop level prospects. here year, XXXX. higher grow invest we in We of in labs solutions, expansion little locked year reasons to down lock to higher going Again, the go high-growth to year last plans we've tolerance

Brian Russo

driver power Are rolled the contract looking and the And great. in also to to weak, also large I reduced defense Okay, that? nuclear is as a you that contributing that industrials that had I backfill top guidance XXXX. the And you mentioned line? reduced still revenue you contract of for the off. noticed the delays know were and

Edward Prajzner

Gen that roll-off, said. you side. That the expected Power known as Yes, was a was project on

the core going a are So of do can nice, are construction beyond, U.S. you it, X-year new is And at. project chip long, look your we a add nice, looking just kind of at to a that's manufacturing, that work, like that area. whatnot, off. affecting of was at to biggest rolling anticipated That looking piece project the That That was our And business, this was not not guidance. we expected. our although be it's are new to that. not projects, We're of X.X% given ignoring projects brand-new work. because we piece base. we are and call-out not the work, and work a taking nice any a where There CapEx, run-and-maintain lot that. nice defense is We're a excluding plants, year. on and name mostly long That's it's EV new XX% business plants, to our X- battery hard to that that's throughout

longer-term work So at that on we look to after some replace sticks a hard there. around repeats year and year cycle long taking a that that are of

There are So, at that. yes, looking we some opportunities there. good are

off. are that replace that's mix work, our to that plan replace contract in longer-term do looking we we to So Yes, dropping of business.

Brian Russo

growth less then What forward than X%? just mean mean? step XXXX. does one Okay. that modest exactly single-digit that revenue take to And Does

Edward Prajzner

probably should yes. you how that, That's interpret

that's thinking in somewhere yes. are X% We range, to it's that maybe X%,

that We hard are looking now. at

kind with are we're to thinking thinking the the there. next well hard in we that's That's what this We of would you year. way want the for budget, next year. at about takeaway point have But

Brian Russo

lastly, might where And mean, to maybe even in the years? that a maybe can other question there increasing scale Mistras for even of this Okay. then X X is inorganic an mix Sensoria and envision but CEO, and do I or is component? your solutions the for be subsectors Manny, diversifying you technology? permanent you it and is And data some leverage business, it growth adding maybe

Manuel Stamatakis

that going area the closely more now also is We We going doing organic think inorganic growth.But our we'll how we opportunities to the working. future organic if lot Analytical I talked We at to focus is initiative, growth. sales within think at about strategic think grow be company. a look pricing to Data future. that's but process is we're big Solutions. our be entire looking is have growth right be sense, there our are We focus think a component And should of that we very of organic those. But make opportunity our growth.

a to lot Look, well the framework to can. It's advantage going take And as be Oil that component in our well that that still of We to industries. of have going as we millions analyze is But Gas, of be extent data & different in assets that analytic key we and as & Gas, think we and millions tested. of as data we future. should wealth we the we a other can have areas. of Oil chemical, in to have

focus want anything When rather forward vigorous to moving go through a makes we inorganic. So, makes from to going That's return if improve of that all I but your initiative answers be hope think walk sense, don't investment I organic. we is it of sense. now business that than not improve a We're our analogy. that question, organic undertake and going going it going efficiency, single lot improve that I know to we're would to does. to we're in. to strategy, invest, pipeline will right continue work bring our away and our the Every on just sales way

Brian Russo

does very much. it Yes,

Operator

for Manny remarks. back over I conference And would to to turn any further the like Stamatakis

Manuel Stamatakis

all, want providing your to and call forward There more continued in come, this thank of thank to first I today. an the for do with towards Well, for thank joining is want to you call. to you initiatives our Mistras. our operator. progress you, interest everyone next I look on on I achieved and update business

and a safe have day. So prosperous everyone, you very Thank much. please

Operator

today's concludes Thank you for participating. call. conference This

You may disconnect. now

Mistras (MG) 3 Nov 232023 Q3 Earnings call transcript