LONDON, UK / ACCESSWIRE / October 10, 2016 / Active Wall St. announces its post-earnings coverage on Mistras Group, Inc. (NYSE: MG). The company released its financial results for the first quarter of fiscal year 2017 on October 06th, 2016, after the market close. The global provider of technology-enabled asset protection solutions reported a decline in revenue and earnings and also lowered its FY 2017 guidance. Register with us now for your free membership at: http://www.activewallst.com/register/.

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Earnings Reviewed

For the three months ended on August 31st, 2016, Mistras reported net income of $6.6 million, or $0.22 per diluted share, slightly below the prior fiscal year's net income of $6.9 million, or $0.23 per diluted share, thus topping consensus forecast by $0.02 per share. The company's revenues declined by 6% on y-o-y basis to $168.4 million for Q1 FY17. The revenue decline reflected a tough prior year comparison as well as the timing of customer project-related spending.

Segment Results

For Q1 FY17, revenue from Mistras' Services segment declined by 8% to $126.69 million compared to the prior year, driven almost entirely by negative organic growth stemming from the timing of customer projects, a tough prior year's comp, and a lower overall market for NDT spending. Services segment's operating income before special items declined by $1.5 million, or 10% in Q1 FY17 compared to the prior year.

The company's International segment's revenues grew by a net 2% to $37.52 million as mid-single digit organic growth was slightly reduced by foreign exchange and dispositions. International segment operating income before special items more than doubled to a record quarterly level of $4.8 million in Q1 FY17, driven by significant improvements in sales mix in the Company's German and UK businesses, as well as mid-single digit organic revenue growth across the segment.

Mistras suffered a 29% contraction in Products and Systems revenues at $6.17 million, driven by lower sales volumes. Products and Systems segment operating income declined by $1.0 million.

Operating Metrics

For Q1 FY17, Mistras reported that adjusted EBITDA was $21.2 million, or 12.6% of revenues, compared to the prior year's $22.3 million, or 12.4% of revenues. Gross profit margins improved on y-o-y basis for the 5th consecutive quarter to 29.7% in Q1 FY17 compared to gross profit margin of 28.5% in Q1 FY16. The increased gross margin rate was driven by improvements in sales mix, contract management discipline, utilization of technicians, and in the International segment, by the beneficial impact of organic growth. The company's operating margin was 6.6% of sales in Q1 FY17 as compared with 7.2% in the prior's year's first quarter.

Cash Matters

Cash flow from operating activities was $17.3 million in Q1 FY17, representing improvement of $1.1 million, or 7% over prior year. Mistras' free cash flow was $13.3 million in the reported quarter, an improvement of $1.7 million, or 14% compared to Q1 FY16. The company utilized its free cash flow generated primarily to pay down total debt by $16.7 million. The company's net debt (total debt less cash) of $73.9 million was approximately 0.8x of adjusted EBITDA at August 31, 2016. At the end of the reported quarter, Mistras had cash and cash equivalents worth $14.94 million compared to cash and cash equivalents of $21.19 million as of May 31st, 2016.

Outlook

Mistras reduced its near-term financial guidance citing its customers planned spending patterns for the remainder of calendar 2016. The company had initially expected revenue to increase from 0% to 2% over the prior year to a range from $720 million to $735 million, this have been lowered to a new range of $690 million to $705 million which would represent a decline from 2% to 4% below the prior year. Mistras had earlier forecasted earnings per diluted share to increase from 3% to 17% above the prior year, excluding the impact of the prior year's legal settlement to a range from $0.99 to $1.12 per diluted share. The company has lowered these expectations to a range from $0.88 per diluted share to $0.97 per diluted share which would represent a decline of 9% to a decrease of 1% compared to the prior year.

Stock Performance

On Friday, October 07, 2016, the market reacted negatively to Mistras' earnings results and lower guidance, sending the company's shares tumbling 12.99%, to finish the day at $20.30 with volume of 610.65 thousand shares exchanging hands by the close of the trading session. For the last twelve months, the stock has gained 3.62%. Furthermore, on a year to date basis, the stock gained 6.34%. Shares of the company have a PE ratio of 24.46.

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SOURCE: Active Wall Street