Mistras (US:MG)2019-08-06 19:21Financial Performance - Revenues for Q2 2019 were $200.6 million, an increase of $8.8 million, or 5%, compared to Q2 2018[154] - Gross profit for Q2 2019 was $60.1 million, representing 29.9% of revenue, up from 28.7% in Q2 2018[153] - Operating expenses for Q2 2019 were $44.7 million, or 22.3% of revenue, down from 23.3% in Q2 2018[153] - Income from operations for Q2 2019 was $15.4 million, or 7.7% of revenue, compared to 5.4% in Q2 2018[153] - Net income for Q2 2019 was $7.4 million, an increase from $6.0 million in Q2 2018[153] - Revenues for the first half of 2019 were $377.4 million, a decrease of $2.0 million, or 1%, compared to the first half of 2018[154] - Total revenues for the three months ended June 30, 2019, increased by 5% to $200.6 million, compared to $191.8 million for the same period in 2018[156] - For the six months ended June 30, 2019, total revenues decreased by 1% to $377.4 million, with services segment revenues increasing by 3%[158] - The gross profit margin for the six months ended June 30, 2019, was 28.9%, an increase from 27.2% in 2018[162] Segment Performance - Services segment revenues rose by 9% to $161.2 million, driven by mid-single-digit acquisition growth and low single-digit organic growth[156] - International segment revenues decreased by 10% to $37.1 million, primarily due to unfavorable foreign exchange impacts and a mid-single-digit organic decline[156] - Products and Systems segment revenues fell by 21% to $4.3 million, attributed to lower sales volume and the sale of a subsidiary[156] Operational Efficiency - The company emphasizes the integration of solutions to service customers throughout their assets' lifetimes, enhancing operational efficiency[133] - Income from operations (GAAP) for the three months ended June 30, 2019, increased by $5.1 million, or 50%, to $15.4 million[164] - The company's top ten customers accounted for approximately 39% of total revenues for the three months ended June 30, 2019, up from 35% in the same period of 2018[157] Expenses and Liabilities - The company recorded a charge of $0.5 million for potential withdrawal liability related to multi-employer pension plans during the three and six months ended June 30, 2019[168] - For the six months ended June 30, 2019, income from operations (GAAP) decreased by $5.7 million compared to the same period in 2018, while income before special items (non-GAAP) decreased by $0.2 million, or 1%[169] - Operating expenses (GAAP) as a percentage of revenue increased to 26% for the six months ended June 30, 2019, up from 23% in the same period of 2018[170] - Interest expense for the six months ended June 30, 2019, was approximately $7.1 million, an increase from $3.7 million in 2018, primarily due to borrowings related to an acquisition[171] - The effective income tax rate for the six months ended June 30, 2019, was approximately 45%, compared to 31% for the same period in 2018[172] Cash Flow and Financial Position - Cash provided by operating activities for the six months ended June 30, 2019, was $21.1 million, representing a year-on-year increase of $1.0 million, or 5%[174] - Cash used in investing activities was $11.0 million for the six months ended June 30, 2019, compared to $10.3 million in 2018[175] - Net cash used by financing activities was $23.1 million for the six months ended June 30, 2019, compared to $19.3 million in the same period of 2018[176] - As of June 30, 2019, the company had cash and cash equivalents totaling $12.5 million and available borrowing capacity of $130.2 million under its Credit Agreement[178] - The company was in compliance with the terms of the Credit Agreement as of June 30, 2019[179] - There were no significant changes in contractual obligations and outstanding indebtedness as disclosed in the 2018 Annual Report[180] Market Outlook - The acquisition of Onstream in December 2018 supports corporate initiatives and enhances capabilities in the midstream oil and gas market[141] - The company expects stable oil and gas customer spending for inspection services throughout the remainder of 2019[149] - The asset protection industry is expected to grow due to aging infrastructure and increasing demand for refined petroleum products[142]