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Delaware									22-3341267
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)
195 Clarksville Road
Princeton Junction,			New Jersey						08550
(Address of principal executive offices)									(Zip Code)

 

  

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

MG

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller

reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

o

Accelerated filer

x

Non-accelerated filer

o

Smaller reporting company

☐

Emerging Growth Company

☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes  ý No

As of November 3, 2025, the registrant had 31,548,153 shares of common stock outstanding.

 

									PAGE
PART I—FINANCIAL INFORMATION
			ITEM 1.			Financial Statements			1
						Unaudited Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024			1
						Unaudited Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2025 and September 30, 2024			2
						Unaudited Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2025 and September 30, 2024			3
						Unaudited Condensed Consolidated Statements of Equity for the three and nine months ended September 30, 2025 and September 30, 2024			4
						Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and September 30, 2024			5
						Notes to Unaudited Condensed Consolidated Financial Statements			6
			ITEM 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			25
			ITEM 3.			Quantitative and Qualitative Disclosures about Market Risk			35
			ITEM 4			Controls and Procedures			35
PART II—OTHER INFORMATION
			ITEM 1.			Legal Proceedings			36
			ITEM 1.A.			Risk Factors			36
			ITEM 2.			Unregistered Sales of Equity Securities and Use of Proceeds			36
			ITEM 3.			Defaults Upon Senior Securities			36
			ITEM 4.			Mine Safety Disclosures			36
			ITEM 5.			Other Information			36
			ITEM 6.			Exhibits			37
SIGNATURES									38

 

 

 

(in thousands, except share and per share data)

 

(in thousands, except per share data)

 

 

			Three months ended September 30,												Nine months ended September 30,
			2025						2024						2025						2024
Net income			$	13,203					$	6,416					$	13,161					$	13,793
Other comprehensive income:
Foreign currency translation adjustments			$	(2,985)					$	4,161					$	11,227					$	(1,684)
Comprehensive income			10,218						10,577						24,388						12,109
Less: net income attributable to noncontrolling interest			95						15						222						28
Less: Foreign currency translation adjustments attributable to noncontrolling interests			—						—						(127)						—
Comprehensive income attributable to Mistras Group, Inc.			$	10,123					$	10,562					$	24,293					$	12,081

 

			Nine months ended September 30,
			2025						2024
Cash flows from operating activities
Net income			$	13,161					$	13,793
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization			23,161						24,726
Deferred income taxes			2,287						(2,026)
Share-based compensation expense			6,067						4,256
Bad debt provision for troubled customers, net of recoveries			901						681
Foreign currency loss (gain)			2,420						(23)
Other			(1,226)						(1,493)
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions
Accounts receivable			(44,230)						(11,979)
Inventories			(5)						431
Prepaid expenses and other assets			(7,158)						(39)
Accounts payable			6,679						(3,583)
Accrued expenses and other liabilities			171						(138)
Income taxes payable			(1,385)						(135)
Net cash provided by operating activities			843						24,471
Cash flows from investing activities
Purchase of property, plant and equipment			(18,534)						(14,315)
Purchase of intangible assets			(3,166)						(3,832)
Proceeds from sale of equipment			2,736						995
Net cash used in investing activities			(18,964)						(17,152)
Cash flows from financing activities
Repayment of finance lease obligations			(4,419)						(4,183)
Repayment of long-term debt			(8,441)						(6,537)
Proceeds from revolver			74,000						53,500
Repayment of revolver			(33,400)						(47,701)
Taxes paid related to net share settlement of share-based awards			(1,524)						(1,326)
Net cash provided by (used in) financing activities			26,216						(6,247)
Effect of exchange rate changes on cash and cash equivalents			1,393						1,642
Net change in cash and cash equivalents			9,488						2,714
Cash and cash equivalents at beginning of period			18,317						17,646
Cash and cash equivalents at end of period			$	27,805					$	20,360
Supplemental disclosure of cash paid
Interest, net			$	10,070					$	12,595
Income taxes, net of refunds			$	6,874					$	4,406
Noncash investing and financing
Equipment acquired through finance lease obligations			$	4,393					$	3,642

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Mistras Group, Inc., together with its subsidiaries (the "Company"), is a global leader in technology-enabled industrial asset integrity solutions, serving critical industries including oil & gas, aerospace & defense, power & utilities, manufacturing, and civil infrastructure.

The Company’s core capabilities also include NDT field inspections enhanced by advanced robotics, laboratory quality control, laboratory materials services, shop laboratory assurance testing, sensing technologies and NDT equipment, asset and mechanical integrity engineering services, and light mechanical maintenance and access services.

The Company has three operating segments. Our segments are as follows:

•North America: This segment provides asset protection solutions predominantly in North America, with the largest concentration in the United States, followed by Canada, consisting primarily of NDT, inspection, mechanical and engineering services that are used to evaluate the safety, structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components. Software, digital and data services are included in this segment.

 

•International: This segment offers services, products and systems similar to those of the other segments to select markets within Europe, the Middle East, Africa, Asia and South America, but not to customers in China and South Korea, which are served by the Products and Systems segment.

 

•Products and Systems: This segment designs, manufactures, sells, installs and services the Company’s asset protection products and systems, including equipment and instrumentation, predominantly in the United States.

We continue to monitor the impact tariffs or trade barriers may have on our business, including recent U.S. tariffs imposed or threatened to be imposed on China, Canada, Mexico and other countries and any retaliatory actions taken by such countries. The tariffs have not had a material effect on our business or results of operations to date in 2025, but could result in additional costs to us and could impact the import of materials by our customers which are inspected by us.

In the third quarter of 2025, the price of crude oil continued to decline due to multiple macroeconomic and geopolitical forces. The decline in crude oil prices has had an adverse impact on field related services that the Company provides to the oil and gas sector, which could continue if prices remain low.

 

The Unaudited Condensed Consolidated Financial Statements contained in this report have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP") and Securities and Exchange Commission ("SEC") guidance allowing for reduced disclosure for interim periods. In the opinion of management, the Unaudited Condensed Consolidated Financial Statements include all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods of the years ending December 31, 2025 and December 31, 2024.

Certain items included in these statements are based on management’s estimates. Actual results may differ from those estimates. The results of operations for any interim period are not necessarily indicative of the results expected for the year. The accompanying Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the notes to the Audited Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Annual Report").

 

 

The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of Mistras Group, Inc. as well as its wholly-owned subsidiaries, majority-owned subsidiaries and consolidated variable interest entities (VIE). For consolidated subsidiaries in which the Company’s ownership interest is less than 100%, the non-controlling interests are reported in stockholders’ equity in the accompanying Unaudited Condensed Consolidated Balance Sheets. The non-controlling interests in net results, net of tax, is classified separately in the accompanying Unaudited Condensed Consolidated Statements of Income. All significant intercompany accounts and transactions have been eliminated in consolidation.

Certain amounts in prior periods have been reclassified to conform to the current year presentation. The impacts of the reclassifications are shown in the tables below. Any reclassifications not shown below did not have a material effect on the Company's financial condition or results of operations as previously reported.

Beginning on January 1, 2025, the Company changed the presentation of certain costs on its Unaudited Condensed Consolidated Statements of Income, which include costs incurred at the Company's operational labs as well as the costs for certain personnel that indirectly support the Company’s delivery of services. This voluntary change in classification of certain overhead and personnel costs, which were determined to be directly related to the Company’s delivery of services, resulted in a decrease in selling, general and administrative expenses and an offsetting increase in cost of revenue. The Company believes this presentation is preferable as it will provide greater transparency regarding its cost of revenue and better align with how the business is managed.

This change in classification has been applied retrospectively to all periods presented and affects selling, general and administrative expenses; cost of revenue; and gross profit on the Company's Unaudited Condensed Consolidated Statements of Income. This change in presentation had no impact to revenue, income from operations, income before provision for income taxes, provision for income taxes, net income, earnings per common share, or other components of equity, net assets or cash flows. In addition, selling, general and administrative expenses and other expenses information disclosed in Note 14 Segment Disclosure were adjusted for this change. The impacts of the update to the presentation of certain indirect costs on the Company’s Unaudited Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2024 are reflected below under the "Effect of change" columns.

 

The Company’s significant accounting policies are disclosed in Note 1–Summary of Significant Accounting Policies and Practices in the 2024 Annual Report. On an ongoing basis, the Company evaluates its estimates and assumptions, including among other things, those related to revenue recognition, long-lived assets, goodwill and acquisitions. Since the date of the 2024 Annual Report, there have been no material changes to the Company’s significant accounting policies.

Income taxes are accounted for under the asset and liability method. We recognize deferred tax assets and liabilities at enacted income tax rates for the temporary differences between the financial reporting bases and the tax bases of our assets and liabilities. Any effects of changes in income tax rates or tax laws are included in the provision for income taxes in the period of enactment. Our net deferred tax assets primarily consist of net operating loss carry forwards, or NOLs. A valuation allowance is provided if it is more likely than not that some or all of a deferred income tax asset will not be realized. A current tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the current and prior years.

As of September 30, 2025, management concluded that it is more likely than not that a substantial portion of the Company's deferred tax assets will be realized.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution.

The Company’s effective income tax rate was approximately 22.3% and 29.0% for the three months ended September 30, 2025 and 2024, respectively. The Company’s effective income tax rate was approximately 21.9% and 22.1% for the nine months ended September 30, 2025 and 2024, respectively.

The effective income tax rate for the three months ended September 30, 2025, was higher than the statutory rate primarily due to the impact of foreign currency losses. The effective income tax rate for the three months ended September 30, 2024, was higher than the statutory rate primarily due to the impact of an unfavorable discrete item related to stock compensation.

The effective income tax rate for the nine months ended September 30, 2025, was higher than the statutory rate primarily due to the impact of foreign currency losses. The effective income tax rate for the nine months ended September 30, 2024, was higher than the statutory rate primarily due to the reversal of valuation allowances.

On July 4, 2025, H.R.1, commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), was enacted, which includes a broad range of tax reform provisions. These tax reform provisions include the extension and modification of certain provisions of the Tax Cuts and Jobs Act and is effective for calendar year 2025. The changes include, but are not limited to, immediate expensing of domestic research and development expenditure, the restoration of 100% bonus depreciation, and an EBITDA-based interest expense limitation. These provisions did not have a material impact on the Company’s financial statements for the three or nine months ended September 30, 2025.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid disclosures. The new standard is effective for fiscal years beginning after December 15, 2024. The Company does not expect ASU 2023-09 to have a significant impact on its annual consolidated financial statements and related disclosures.

On November 4, 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures, to require disaggregation of certain expense captions into specified categories in disclosures within the notes of the financial statements. The standard is effective for fiscal years beginning after December 31, 2026 and early adoption is permitted. The guidance is required to be applied prospectively and amendments in the ASU may be applied prospectively or retrospectively. We are currently evaluating the impacts this standard will have on our disclosures.

On March 6, 2024, the SEC adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors, which will require registrants to provide certain climate-related information in their registration statements and periodic reports. The required disclosures will include, but are not limited to, specific disclosures about climate-related risks and their actual or likely material impacts on the registrant’s business, strategy, and outlook; the governance of climate-related risks and relevant risk management processes; Scope 1 and 2 greenhouse gas (GHG) emissions, if material or included in announced emission targets; certain climate-related financial statement metrics and related disclosures in a note to the audited financial statements; and information about climate-related targets and goals. The rules were scheduled to become effective for the Company beginning with the year ended December 31, 2025. However, in response to various legal challenges, the SEC voluntarily stayed the rules on April 4, 2024, and ended its defense of the rules in response to the pending legal challenges. The company continues to monitor any developments regarding these rules and the expected timing for compliance.

The Company derives the majority of its revenue by providing services on a time and materials basis, which are short-term in nature. The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers.

The Company provides highly integrated and bundled inspection services to its customers. The majority of the Company's contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and is, therefore, not distinct. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the Company's best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is a relative selling price based on price lists.

Contract modifications are not routine in the performance of the Company's contracts. Generally, when contracts are modified, the modification is to account for changes in scope to the goods and services that are provided. In most instances, contract modifications are for goods or services that are distinct, and, therefore, are accounted for as a separate contract.

The Company's performance obligations are satisfied over time as work progresses or at a point in time. The majority of the Company's revenue is recognized over time as work progresses for the Company's service deliverables, which includes providing testing, inspection and mechanical services to our customers. Revenue is recognized over time, based on time and material incurred to date which best portrays the transfer of control to the customer. The Company also utilizes an available practical expedient that provides for revenue to be recognized in an amount that corresponds directly with the value to the customer of the Company's performance completed to date. Fixed fee arrangements are determined based on expected labor, material, and overhead to be consumed on fulfillment of such services. For these arrangements, revenue is recognized on a cost-to-cost method tracked on an input basis.

The majority of the Company's revenue recognized at a point in time is related to product sales when the customer obtains control of the asset, which is generally upon shipment to the customer. Contract costs include labor, material and overhead.

The Company expects any significant remaining performance obligations to be satisfied within one year.

The majority of the Company's revenues are short-term in nature. The Company enters into master service agreements ("MSA"s) with customers that specify an overall framework and contract terms. The actual contracting to provide services or furnish products are triggered by a work order, purchase order, or some similar document issued pursuant to a MSA which sets forth the scope of services and/or identifies the products to be provided. From time-to-time, the Company may enter into longer-term contracts, which can range from several months to several years. Revenue on certain contracts is recognized as work is performed based on total costs incurred to date in relation to the total estimated costs for the performance of the contract at completion. This includes contract estimates of costs to be incurred for the performance of the contract. Cost estimation is based upon the professional knowledge and experience of the Company's project managers, engineers and financial professionals. Factors that are considered in estimating the work to be completed include the availability of materials, the effect of any delays in the Company's project performance and the recoverability of any claims. Whenever revisions of estimates, contract costs and/or contract values indicate that the contract costs will exceed estimated revenues, thus creating a loss, a provision for the total estimated loss is recorded in that period.

The following series of tables present the Company's disaggregated revenue:

Revenue by industry was as follows: