MG - Earnings call 4 2023 | Mistras Group, Inc.

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Operator

Thank you for joining MISTRAS Group's conference call for its fourth quarter and fiscal year ended December 31, 2023. 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; and Ed Prajzner, Senior Executive Vice President and Chief Financial Officer.Before we begin today's conference, 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.

Some of those factors that can cause actual results to differ are discussed in the company's most recent annual report on Form 10-K and other reports filed with the SEC.The discussion in the conference call will also include certain financial measures that are not prepared in accordance with U.S. GAAP. non-U.S. these of Reconciliation to directly measures U.S. the financial comparable most GAAP Form the be in company's GAAP on can in related tables report the financial measures and found contained release yesterday's current X-K. press the company's reports on SEC's to will website.I available over These turn conference Stamatakis. website the the are now Manny the Investors in section on

Manuel Stamatakis

nearly same Good morning, with joining X% quarter a exceeding results for adjusted fourth revenues and We up the today. everyone. us Thank XX% EBITDA ago. year up expectations, quarter you year finished from with the

this opportunities essentially of initiatives. is have I Phoenix Phoenix Phoenix team. on of and where workstreams improve improve But financial high meaningful XXXX. still revenue made the XXXX be new our benefits the the our to our EBITDA implementing I expectation 'XX, Consequently, as we can EBITDA throughout be of initiated will that XXXX, you performance a various transformative Project a management which is Although that we changes year are performed all not function to team. new to company, time, capitalize changes implementing short in that new we changes while success, taking small a Commercial we are instilling to changes progress our marketing over sample, of groundwork performances.Throughout term. in efficiency and revamping making and operations the Project believe both our future our organization financial activities will and for are the set there continue long our across value with to impact energized, the several steps fourth performance identifying this Phoenix, of improvement rebuilding and also strategy and in our evidence our EBITDA to same EBITDA work momentum and that the we the year the we realize program.At fell Officer XXXX XXXX.Project expect the throughout by quarter strong of assess reiterating and a the the implementing was good to our done, effectiveness drove the tell results have of organization for is energized of role we unlock we to full providing recognize and commercial fiscal team and initial is are in one MISTRAS' heading to necessary, of intrinsic within goal, XXXX as Chief number all-time further competitive our new focus expectations.We implementation management majority advantages, if an many from into on eliminate, driven the

and the throughout which results behavioral on evident. and related accountability, Beyond shareholder company's place focus also company.For with and XXXX, increases accountability revamped are taking rewarding that value. we focused stronger Phoenix, focus incentive we the of the the The is becoming performance pure financial on to also a already changes adapting plan with overall conform discipline, company quickly culture, are Project the organizational have

These capital the and quarter XX% the into quickly, our customers significantly is working revenue XXXX.Data the adjacent in attractive uncovering customers already needs is more For by cross-collaboration, our expand is being expenditures on our and to Commercial progress businesses of growth of growing closely technologies. we the at the are facility example, various part can in in strategies and shop into rapidly price expanding, that other initiatives, in high-margin am facilities to What up gaining me has we a as developing I needed the and initiatives. and complement are large time our believe markets.There Analytical serviced was expect year. industrials and of spending be with which Phoenix. capacity fourth at continue increases more this private full list growth are growth XX% achieved growing growth to strategic in full laboratory for impact obtaining Project and sustaining rapidly Solutions of these are existing expansion the our most aerospace, short are the excited priorities a and globe. key businesses our result markets.To space, in that across also These I Georgia

third to CEO in progress goal disciplines remain excellent my of are have other First, go-forward of a I and am the still that in Project involved to the continuing and deeply quarter year, basis. Phoenix continuation this place is new cost making on in a by we regard.Second, ongoing

the Third, I the a development bottom rates. include chain enable company of robust more profitably transparency, on plan strengths company's and clear and company am years lackluster that capitalize strengths provide to challenges, MISTRAS performance, identify improvements, on enable clear operations on command.After our the few will the accountability, financial CEO a to his guiding and confident both of which line our process energies to continue of I pathway we can the that we will set that grow our continue focusing at a or a principles, top core attractive shareholder focus and and growing of to reshaping to have further next I so culture, will her intend to value.Finally, a review improving

we toward prominence Our capitalize which I well a as ensure shareholders, and integrate way the we by at markets skilled, on more and growing, is for extremely expertise. the and leading to making are complex. an our of company value believe create company, that more believe more I I leadership leader. developed initiatives the over update and exciting team. long-term more goal a increasingly as full be and to currently to maintain I large, industry results of our announcements goals.Now our supported position these move optimistic to technology, more trends, more to would on even recent my under have achieving.With his highly to as sophisticated can The call more our progress that belt we senior I well-positioned the data, forward be This now detail achieve and for to like pleased are emphatically the about Ed little and underway are on on to state quarter Phoenix. invigorated, improve juncture, motivated this an solutions We as plan crucial am we demands even that becoming and been CEO, turn future this Project we

Edward Prajzner

and related this instituting earlier, Improvements job achieved, our invoicing In finish Phoenix by regionalization and This solutions.In to complete.Again, improved noted current but recognize, Manny addition of to is which improved is this areas, year. that results core include new not turn, MISTRAS. new various I as Thank implemented beyond a areas and to the quarter, processes, initiatives finding is year. a our and achieve to transactional entry have is data you, XXXX, a breadth targets Manny, ERP, protection laser-focused build this allowing to will new inspiring operational also back related of lead demonstrate and organization to we scheduled further core discipline overall and activity as Manny evolving the capitalize on competencies leverage and our opportunities as and drive upgrade on growth and our re-energized under us growing sales strong significant enhanced is success time in on clearly the efficiency, asset including other expected transformative Project the demand to XXXX depth productivity. our Everyone at enable also only QX and automation yet digitize a areas for underlying said, beginning and of there in we change, capabilities collection discipline efficiency for productivity, am us goals.Turning to is a morning, Fourth to functions. related the reduce planned quarter will throughout bottom-line bottom-line of enhancing everyone. can we to Phoenix. and consistency, were excited by good the Project manual fourth leveraging and results enabling are

is to growth from Defense solutions market and the their had growth, XXXX. up both overall top bounced of with of While oil been industrial. of and have still delays increasingly some into am fourth the turnaround however, robust our assume Whereas the contract, and early more all X quarter upstream, second improvements pipelines.Aerospace one, and classify as ongoing plans In however, oil in of and and defense from to normalized sales presented X the fourth market a America defense, this expand gain the saw year, XXXX, in largest there the over level of benefit X%, Aerospace strong in over strong but the the results Project will aerospace of data strength due will North our and and confident which remain has comparable back a I activity in we more a real a with strong energy turnaround market.For midstream and downstream expectations the Europe.We turnaround drive XXXX. markets, Manny analytical In early, bottom-line both to over quarters activity being and quarter were been and due gas, in downstream, refineries half that the which suspended of will in continue Onstream, in our over large subcategories, Phoenix including facilitating stated expect of PCMS a market were since and XXXX; quarter just implementation fundamental that term.Revenues earlier, both success of in and which our to Defense, not first to primarily long this likely been difficult becoming gas, that change growth and share. third midstream,

that up full The and which is Georgia, operational facility quickly fully primarily customers, ramping our other capacity. now is aerospace serves in to

and it and and business trend plan EBITDA In an double-digit we customers.In also the continued primarily to slowdown, quarter, to remain continue our it competitive saw and outside quarter team just believe is fourth our existing leverage business the and and And of with we applicability. to we service for again strong is expect foreign pleased in increase a up and This our That to an and $XX.X in more West this do employee focuses corporate dollars, record spring the market at we better technologies third X.X% the of addition, in not oil Gross and for the over relieve also revenue great related private just to help QX below in were with year partially due year area new directive supply the Onstream new broke offerings savings and commercial the expansion in and X% activity, in Penn solutions, continuing average also in from compensation We to expenses PCMS a see for continuation gas constraints high full has by fall showing profit signs our into sustained we normalized our higher were sales of revenue at was continue space, refinery near a from term, experienced our ago, we into transitions no but SG&A revenue year once down to the growth benefit data mix currency million, were due our chain this turnaround businesses. cycle.Gross by the the a expect in market best-ever taken reflect of fourth growth expand the our marginally the administrative fiscal unfavorable leader, initiative generation, term. to quarter to compounded do many set this prior and guidance. in which where emphasis Phoenix, these near where $XXX,XXX. the quarter. a one industries PCMS Project the due of fourth the expense we primarily legacy margin management fourth quarter is corporate to the strengths.While factored XXXX of turnaround growth period. levels stock over analytical expand driven its to by fact, turnaround expect actions the losses, offset quarter increased an to is tend by revenue 'XX, a executive received which profit general, run we were run however, XXXX and strong our higher turnaround, associated exchange with industry, credits margin.Selling, in 'XX activity up approximately of growth included

we quarter.Beginning to would the in in the significantly expect the in year of stock our be approximately of SG&A of below XX% line impact and to the adverse goal Excluding levels first aforementioned with quarter exchange reduce foreign revenue. to the SG&A full comparable XXXX, 'XX comp, executive have decreased SG&A XXXX and in be

ancillary effect as For expected benefits in drive the to down instance, we headcount, other drive Phoenix is of $XX the XX% will our SG&A SG&A. as overhead the full by well full loss quarter, the was approximate costs approximately enable examples, -- total costs share receive down fourth reduction Project to us profit of to gross of million as in to revenue year a of also $XXX,XXX related other loss, and reorganization XXXX, from for and million. GAAP due while providing $X.XX net $X.X million or $X.X per operations with the aforementioned loss benefits.Income

in the up share, million, per year QX commercial decrease the from and strategic was the per EBITDA approximately the in shop fourth time which provided was highest quarter of X slightly free primarily other order quarter, the up for operating share turned $XX.X areas, adjusted respectively, percentage This per activities for being as cash from had and the are the support full order positive of laboratories via The was flow quarter. to After million. QX have nearly in as data for a capital the million, $XX.X growth well free $X.XX as intently $XX.X revenue EBITDA sorry, an capital adjusted $X.X growth to labs of the increases shop prior flow per year-ago quarters from million net data our were including was investments XX% year $X.X is $XX.X QX raising million year. positive in in of organic million income to $X.X over operations.We quarter, in the by negative non-GAAP is share the at expenditures all income, reorganization analytical solutions. the which share, net of period.For cash for revenue cash $XX.X XX%.Net we growth year non-GAAP aerospace up function adjusted $X.XX first on for prior was 'XX due year, year improved EBITDA million expenditures focused was analytical earnings and million, and expanding -- and foster the the result to in Excluding million non-recurring solutions earnings costs, $XX.X

meet miss projections initiatives strategic on for growth also spend and our caused increased savings. consulting this demands severance flow achieve in of free this cash our While to CapEx to continue our were required with for and costs, cash for provide the year was with which year, best-in-class the XXXX above Project Phoenix form guidance to in us the capability meaningful customers' to had our beyond.We associated and the cost significant the investments outlays nevertheless us

his so X.X a expenditures to a of reduction result to increase a the leverage We we incrementally well we strategy, am recognize impacted same December am debt done.Over we the it unique increasing is company's year-over-year the 'XX, XXXX. interest a in best continue decrease many capital, and days, quarter, to what move the questions. for throughout are I to this valuable in in be work rising In by the with your to a and protect your growth in our to our full as revenue results like proprietary the sometime Xx will time, remarks closing organization some would We projections, skills capital encouraged of continued at achieved. appreciate true point, believe to leverage the years going increasing trailing a only price an to a gross attractive rate X.XX leverage increases the pace relates in which workforce rate growth the on expenditures targeted has improvements, to our to experience from also and was ratio, our before XXXX we -- interest MISTRAS of we implementation early free our expense the expand There XXXX.At prospective impact we and the a gain achieve with current interest improved increase that quarter need to our goals we of remain course of at which in which 'XX are our in Project will performance global to expect in in this financial helping favorable cash optionality and cash the was and adversely We further in financial is plan. as use both support increase for these our as technologies, maintain anticipate our reduction $X.X inventory, debt.As in had committed of ratio.Our and of and which on market.With future year modest XXXX. we benefit demand, At discipline million I of take due due of a are effective over our one us environment. customers' Longer cash margin based debt additional mix turn working in over time EBITDA, first for call as markets.I debt the of trailing slight expect receivable also in fourth of the on in fiscal paydowns ratio investment efficiency I to is capital seeing in outstanding bank-defined top-line expect rate the expansion give our XX-month foster XX, will for borrowing technicians, gross patience half to And reward higher accounts to decrease to are modestly feel developed advantage XXXX.Interest expense term, quarter competitive lower as flow the slight or in and with for time, and now, comfortable have extensive an of productivity Group These margin significantly fiscal modest insights, impact unmatched over through margin growth our even an Phoenix, to to are that very X,XXX flow. in will we our our revenue, XX-month to is able reduction we support sincerely be Based implement ratio Manny business, a reduction. before our back your XXXX. XXXX, our did to assets. prior

Manuel Stamatakis

Thanks, Ed.

We are be Phoenix, will now the and first AlixPartners the we X implementation Project completing with we of as year our this engagement into expected, year. of in quarter

Phoenix pleased are we Phoenix, need with with our and had implementing Project opportunities Project are certainly Every also to we fully the to performance. improve to day, sustaining has success continue vigilant While initiative. MISTRAS the in new identifying we be recognize initial

We business sold EBITDA to amongst are annual overhead benefit closed, positions, of reduction to $XX changing and that initially vehicles run successful of planned million than gross the locations more initiative be be fundamentally basis a expected, are pleased benefits, which was our with including, XXX rate our Project or achieved of projected XXX a disposed of include XXXX, report operations.I XXXX. end to achievements Phoenix by in am X other of

a retention Officer CTO help Phoenix and revenue profits embracing ensuring will be initiative, its they and increase the a remain efficiency will the reporting driving creation will by way The moving pleased turn growth brand regularly.The to which reputation challenge new forward as and conduct improve CEO. operational ongoing and our help also will leaders company moving our will directly position forward, business in line change effectiveness, company announce operations employee CTO to be permanent, new has Project a Transformation higher efforts who the Chief lead and price am commercial improved competitive the enhanced greater the rates. to to position addition In Board strategy.I top of approved that

and will, growth outlook on up from hope achieving news achieve impact good function, the from implemented benefit in emerged this fourth future. This in things, in $XX primarily goals more commercial by Phoenix overhead as million the will to which in an related free savings profitable between achieve of the hear enable full-year part front near million. meaningful revenue Project ramped in of new increase we quarter enhanced which leverage XXXX expect from growth.For encouraged resulted us million. early help a during increased will executed of profitability. the drive the XXXX, amongst has Phoenix to we $XXX a the between between a increased incremental accountability adjusted additionally growth, operating improvements, with Phoenix EBITDA Project revenue and increased in $XX focus, EBITDA, other cost approximately arising and we latter XXXX.I We $XX $XX also which flow in from am the and to organic XXXX, extremely organization includes revenue full-year focus The million strong $XXX was commercial record-adjusted the reduction million actions. of throughout XXXX, discipline returns the addition on in generate attributable for combined we Project million $XX efficiency million The You set have in cash anticipate significant to and and

our on data this and I are course we to set uncovering analytical and solutions, extensive shareholders.At opportunities Now the where call and other your can time, our problems proprietary operator the and to create integration solve questions. technologies knowledge would value know-how to improvement, of ask our like for a of further customers open continuous for

Operator

[Operator Pinheiro & from with Instructions] comes Co. Mitchell question Sturdivant Our first

Mitchell Pinheiro

million incremental of $XX describe big that expect had perhaps the Can I you a talk year? you about this in of sort us? couple Yes. What savings are that Project questions cost could you for particular. for Phoenix you on of buckets the

Manuel Stamatakis

our to our of But of primarily, that, what it's achieve entire revenue revamped through big That's XXX to a reduction have in the component work overhead we addition have in positions. strategy. we able Well, XXXX. been

desk, with to improved. new and a been forward have We move system CRM deal our a has plan

of to we've are drivers Project kind combination prime So the the of reduction you out there.Project I through revenue I unneeded still Phoenix XXXX X showed of and positions that can think us the there's tell in opportunities But grow the achieved the focus Phoenix. exist. of more what

will projects revisiting We not high-margin and that them profitable we those areas our the in improving are or be not revenue our like focusing working are out would to. on way

So I our Phoenix say to it fact to opportunities. of addition leadership has recognizing to understand, biggest to would that, we the that's Project mechanism plus to structure in better that of addition team reenergized improve. in opportunities the in have And we and a now, take do those a have advantage place

Mitchell Pinheiro

on this. me it you're curious range? Let relates talking that get the as drives you to revenue, let pursue your of some you Like guidance should revenue? it for But of offset, then either about like in culling would bottom sounds how like are if about -- I'm is some the difference could that imagine talk the pass it how we what's negative. the be contracts of to and end terms And bottom of to what range doesn't happen the what there growth. happens That top Project or it how between it Phoenix unprofitable to to would what think you -- the -- about will positives a an I either ask multifaceted. not or anymore. get top? the

Manuel Stamatakis

customers. to And we mix as goal have to includes with to best revisiting can revenue that serve our it And partnering profitable. this that. growth, so interest margin includes be and strategy our MISTRAS end do is sales for to to and determining need anyone's manage our lower our higher It margins do It I what line. areas we business get Well, margins. doesn't think to not in those with we relates up a

continue have our there to enhance gathering inspections assets. protect the X,XXX out to do data technicians our their need to they so to capacity have We and customers to make the the that

to focus performance to more needs going to a our on acceptable. relates be not with there has better mix.As that So And clearly been a improve sales working understand is revenue, customers to overall it profit. our is our to make our organically

want You to looking like to This can change our hit of been. we like that by of And be to the perform to hope that make but high see -- look -- can our We we more a and guidance, achieve meet focus goals. continue our to you a our we In give ever we have significant 'XX, focus. optimistic is am performance maintain range is to and course, end than I our that meet we're been year, I'm of But come where goals. I've and we have optimistic. we'd in overall credibility. at and want performance. optimistic. our where can That everybody's We'd realistic. will we to

now, think from. I gist but you've I'm the that's So all to want that gotten about I of say I where coming think

Operator

with comes Research. Sakai question Chris next Our Singular from

Joichi Sakai

to about I wanted ask overhead reduction.

You've Are any planning you talked it. more on in about XXXX?

Manuel Stamatakis

our to on overhead We're focusing costs. always improving be going

EBITDA appropriate our like of think is I our One that a MISTRAS. a improve goals margin is level for company to to

EBITDA at historical And our and our been have to margin goal is to order think in do hasn't our improve to it. continue we adequate, that, I overhead performance chip to costs. away

And the better after my in which so Phoenix expected. by remarks, out a worked I we phase of said way, as even Project consultant we the though than And have year, concluded much we continue with have working job XXXX, our costs work us.But coming I improving good overhead They give a efficiency. in AlixPartners. will and to to and in our on to did in credit

up position, far. the can to table. what focus have it Officer be created And on that So that who is Chief the we And and Transformation why on still will how to continue is day thus improve single EBITDA beyond the every on continue table. identified will we've we get

Joichi Sakai

well, shed be XXXX? restructuring light some you capital What light, seeing there? expenses same can we will for expenditures, that In and in

Manuel Stamatakis

Well, that's a good question.

Our focus in our in business. in margin ourselves that XXXX will scale to invest initiatives and will high be

as just allocated of therefore, a amount And are to XXXX, are ratio on. leverage for expenditures we about our committed right debt. so have comments Ed's capital we reasonable paying down our but

that to Our it lower keep ratio continue plan and moving forward. leverage is to X to below

down to do So is that going move be forward. we paying we to that room investing objectives to are programs us That will in are our debt. improvement going and hope EBITDA be and continue allow the to we 'XX. our And X

Operator

Hutton. question comes from Moore next Tim with EF Our

Timothy Moore

job Good the just It's August. the since XX% in to see nice stock with improvements. coverage saw up the I

for little the a Do pretty in your to So customers, summer? ways know a Manny, Phoenix, roll-off sixth go for but inning bit have inning, also you that's as What times renewing in I Project of incremental and wondering, tail stock, theme been lot baseball be unprofitable it's of you're you gave already growth they on far some fruit, probably would as projects, I'm still the a million important $XX a what timing. think that's a say, culling think the for that game, or some some because about on you'll savings just low-hanging good a not for more, examples. dive the an of cost through I fifth that your probably end, in to by couple clearly. guidance, rerating asked picking just EBITDA there's But Manny

Manuel Stamatakis

year, this Project on. grow areas making inning. And Phoenix, have we still right relates And it just with identified we've I not correctly room would and think as the to pointed out, go. in a strategy a it's cuts. I what still XXXX. through say lot plan organized should we'll executed might you can be of It's we We or growing those more. the them. there identifying to be summer be identifying is An to by that strategy that fourth be fifth as the But of in

is today, infectious. do. there And is So to confidence company. our There's -- they get us it's more management there. a work in energy but where new have can And that the team I utmost

So most, what me really motivates that. to that's see the

where get I think to going. we're we can

Timothy Moore

mentioning that side. two-pronged But about pricing is Because And I'm thinking approach. then strategy. growth by on I revenue margins, remember of of low addition the last ask you later businesses. innings unprofitable I Project subtraction Phoenix you I actually, call. and to the EBITDA mean, want your the is it what a the to probably is

Your pricing also you environment. When but company, hard to for cost and this driver you in on a inflation and contracts good taking a year. caught that's come might Because pricing mouth, your not words to of up be do years, a resigned? get put couple going cost think was EBITDA projects I'm inflation in as by

Manuel Stamatakis

question. good another That's

take Let of cases, this have going is on In some a multiple-year working the me little say pricing time. to that bit we contracts.

look at we'll we have come for up they to have when differently somewhat for correctly. make years, commit them it the past. to price might something As to than sure Because we in we we renewal, X X

with that, and on profitability have what But I that money we other is approach a our we're the for to It's allowing is technology now our them that better their growth. we to solutions inspecting. time. and just that inspection by to And we'll charge to But to a their of in costs. doing more I have value they're to lowering able focus be them using can will them we be initiatives to so save coming it's the will think over our that understand to think fee. not to uptime something more margin up to software help and and drive is allow over that higher we demonstrate our focus believe going where on And choices going continue combination marketing able out work have add efforts to clients will ultimately their that

Timothy Moore

question to you seemed delayed I see on, could project good I'm could defense project and quarter? tailwind think some I this, on company million projects Ed, commented like quick and get fourth have it March in one from off all going weather I already worth in $X the that always quarter. and the on in just shifted Are almost for reasons. that good wondering, did my company Ed. or has quarter? be in That that estimates, things sales. Any started we have maybe of it get for completely fourth the been service that If achieved I remember

Edward Prajzner

has now question, Yes, lapsed. that Great Tim.

year-over-year into will So no there's going impact that on no XXXX. -- be there

when anniversary off. XX-month the that dropped past are We of

be out. causing defense. call we that point. would will That only will at upside that to be this point. and We focus that That that would this space, on So a be But that in have upside won't private be not not case. commercial at anymore. space lag But tailwinds any

Timothy Moore

I have one last question, and then I'll turn it over.

on that's to think asked the those CAGR maybe December getting I to good you've know amount But it. a you I analytics that think they point been? I margin up think a contribution when do won't have weren't could after this where kind probably the see how a to mean, data to robust came in last XX% you out in and quarter. you're be and year? September there's about Or reaccelerate incremental reinvest maybe about there? of growing do guided as of margin get nice solutions, Do It a maybe call XX% that growth the business good contribution I have down. driver. point They a I sales when as inflection you certain you was steps later it come For been mean, to the quarter gross big revenue. as

Manuel Stamatakis

in time to scale to solutions but order growth 'XX that achieve data planning margins in are strategy we scale. same We good and on that it's we investing at developing in will 'XX in business. will good be in initiative be 'XX, And that 'XX. analytical and It's the and a

because in you'll that solutions team our baked their So still XX 'XX numbers. data growth into see has

beyond. finished quarter the growth, and at objectives fourth beyond the for that year As and in at their They indicated, range finished XX% growth and I XX%. are 'XX they

So about we're that. excited

Timothy Moore

down in driver. about XX I love that ago remember growth with New months York. I Ed it sitting

Operator

from Russo Brian question comes next Our with Sidoti.

Brian Russo

Just That yet? any initiatives commercial million. on the of $XX the if million and -- Is been savings $X SG&A of think i.e. commercialization correctly, that pricing $X about million achieved incremental the overhead, in I heard Project is you the leaves $XX that savings. I million that have Phoenix of XXXX, initiatives? And

Manuel Stamatakis

Ed, why don't you answer that?

Edward Prajzner

The amount that's all Yes, release, that. holding an Yes. Project Manny. press still back the we -- cited and press Sure, components our quarter breakdown we're as release, reiterating the serve, Phoenix, adjunct to November as in for third Brian.

of So incremental $XX other in baked margin million the as you savings about is $XX 'XX. adders, number $X million that was increasing gross SG&A pointed Of profit million reductions. in, revenue the of million, is That out, million price was and million, and the $X -- $XX $X we feel that. good

revenue XXXX. the coming savings improvement line, million That's the SG&A. we're and $X the $XX Project projecting for of million $XX $X on million on you've composite So million coming line, COGS in coming other the the Phoenix incremental

Brian Russo

where out true And maybe pricing of million of $X of adders, of any a pricing date? successful but to initiative been has kind is example there generic the the

Edward Prajzner

Absolutely. streams this -- commercial Pricing was function. in one of on our work key

other trying but is where The is drive pricing one called some enablement, new we're the one. sales business, by key far to

earlier, Manny a we're said bid As in going what the know this, It's new it's a It's strategy. structure. let's after.

desk. Let's deal track through it the

to multiyear Obviously, about hard think pricing impacts. do. really Let's

MSAs. multiyear you've As Manny got said,

discussion. You It's ROI. all change you can't magically have that, the but a about

about As the add. higher value Manny it's said,

the We it's plus a the that's and We're way. want the have to our talking We There capabilities a be bigger about that data discussion longer having be investments in commodity. not to ROI. value about our term.The on a to has discussion. cost seen don't there just we're And customer.

real examples had we've So now.

into the budgets different are are customers, structural thought internal built now to baked in growing the there's a the past.So meaningful customers as There pricing volume increases different having 'XX in different on to meaningful a that top have of factor Our factor of strategies, contracts that in have There went that line of capabilities discipline part budget here there. number in going is dialogues, quite what a bottom-tier 'XX, thing no, we didn't real on top-tier examples opportunities. -- top We that works. organically. our growth

pricing examples as customers have going examples of will a increases real there's Phoenix. about but growth here there. accepted. That's the were meaningful we very phases with one there discussions. that areas, now, pricing large good part forward. has real different customers We've to But trajectory. had having footprint. get I in forward. the that lots And 'XX. our by customer.So strategy, And there's Project accepted that those impact it's where it yes, behold, structure low facets had a there's on leveraging be accepted we that really ending what more a be kind will been a do a So tangible feel of to philosophy a believe there's it more And extent, It's many of those pricing be of to changed, of our work about going of

Manuel Stamatakis

of our contracts with It price combination thinking, increases low-margin those latest year, this It to able to I improving initiatives in and just example, to to Phoenix. develop the -- a of to And were because by that that was And me but pricing customers. takes of combination it got X%, and cutting not the that that you series really margins primarily to thinking, not Just through And that --where working. it's said, business. We Ed And And for was a is is our improve just proved -- year it done give see able that happy July X% year. we one cost because approach February -- it's working. last report the need to in list to I acceptable. as we've of contracts of overhead.So I through our were the tracking been time. had of me pricing last from very a those margins of that asked on Project working. what been was that through and time just to we have weren't more back we've develop reductions,

of see evidence to seen wanted I it. So myself, and that I've

of our low-margin how some started of mindset example Phoenix the in margins has Project the an already that's contracts. so And to improve

Brian Russo

and what's but to you're aerospace side. the And O&G, the slightly end curious faster I XXXX more one out I midpoint at seeing others? given parts guidance, then on last material in you largest third-party growth. of months? playing X X am been commercial segments the raw your looks in the Are within like growing X the for it over X X% mentioned X revenue markets Are and You look interest of that are there defense than or any even sub-markets those when aerospace the inspections, under maybe

Manuel Stamatakis

are. We

have in team seeing improved has I solutions, they that in partner need some our our analytics customers to data aerospace very demand have met. ways are with interest up who with industrials. and to creative our We mentioned come

and we've strategizing in aerospace is more equipment them forward and there adding that been with in So area, direction. demand, that the moving demand meet to by

our will I in in 'XX, growth, improved in as our data grow said, So have analytics, aerospace, and industrials to that in think continue will area. our we we

Brian Russo

And capital then what should we assume expenditures? for XXXX

Manuel Stamatakis

we do what Ed, have?

Edward Prajzner

another We $X have a We'll million, it $X up up from be maybe million. million, little bit probably 'XX. $X

more offerings growth, CapEx. we expanding want plan for service solutions, an labs, have aggressive in new of a in line customers data aerospace, current capabilities, we to Again, those So in where year areas little shop customers. and put types for expanding

not look but that. modestly for. here we've might top it, is up XX% maybe the yes, But if end they're see the be it of to ROIs there. to do over CapEx, we double very not we So will If we're where expand we'll yes, more going -- ever the keep going leaning opportunity in year, in in 'XX. a be paybacks interest so into we're CapEx this so right, But doing high XX% we and that judicious

Manuel Stamatakis

invest, investment. Ed on return And is so has we the that determining acceptable the our on will process on an what based how said do capital expenditures key revamped. just return been revived When and allocate that in to -- to we

to grow expenditures CapEx that on initiatives revenue. focused drive and are be will our So going

Operator

queue. this the At callers see in time, no I

hand I'll closing back for his to the Stamatakis So Mr. over call remarks.

Manuel Stamatakis

also in business forward look I Everyone, MISTRAS. Thank our on joining safe continued important prosperous ongoing call. your you, you, with a day. everyone, today for and have a operator, update interest progress next providing and our an thank you our for and to and towards on initiatives call please achieved this

Operator

today's ends conference This call.

time. this at disconnect may You

Mistras (MG) 7 Mar 242023 Q4 Earnings call transcript