Mistras Group, Inc. (MG) Bundle
Understanding Mistras Group, Inc. (MG) Revenue Streams
Understanding Mistras Group, Inc.’s Revenue Streams
The company reported consolidated revenue of $182.7 million for the third quarter of 2024, representing a 1.9% increase from $179.4 million in the same period of 2023. Year-to-date, the revenue reached $556.9 million, up 6.4% from $523.4 million in the first nine months of 2023.
Breakdown of Primary Revenue Sources
| Segment | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Year-to-Date 2024 Revenue (in thousands) | Year-to-Date 2023 Revenue (in thousands) |
|---|---|---|---|---|
| North America | $149,845 | $148,814 | $456,588 | $431,295 |
| International | $33,662 | $30,980 | $100,972 | $90,664 |
| Products and Systems | $3,276 | $2,829 | $9,860 | $9,897 |
| Corporate and Eliminations | ($4,089) | ($3,269) | ($10,511) | ($8,457) |
| Total | $182,694 | $179,354 | $556,909 | $523,399 |
Year-over-Year Revenue Growth Rate
In the third quarter of 2024, revenue growth was led by the International segment, which grew by 8.7%. The North America segment saw a modest growth of 0.7%. Year-to-date, the revenue growth rates for the respective segments were:
- North America: 5.9% increase
- International: 11.3% increase
- Products and Systems: 0.4% decrease
Contribution of Different Business Segments to Overall Revenue
The revenue contribution from different business segments in Q3 2024 is as follows:
| Industry | North America Revenue (in thousands) | International Revenue (in thousands) | Products Revenue (in thousands) | Total Revenue (in thousands) |
|---|---|---|---|---|
| Oil & Gas | $90,460 | $9,040 | $3 | $99,503 |
| Aerospace & Defense | $16,181 | $5,663 | $42 | $21,886 |
| Industrials | $12,285 | $6,749 | $478 | $19,512 |
| Power Generation & Transmission | $8,029 | $3,081 | $544 | $11,654 |
| Other Process Industries | $7,836 | $3,900 | $79 | $11,815 |
Analysis of Significant Changes in Revenue Streams
Comparatively, the third quarter of 2024 witnessed a decline in Oil & Gas revenue by 3.6% due to anticipated seasonal turnarounds. Conversely, the Aerospace and Defense sector exhibited robust growth of 13.6%, contributing significantly to the North America segment's overall performance.
In the International segment, there was a remarkable 86.4% increase in the Power Generation & Transmission sector, indicating a shift in demand and service provision. The Other Process Industries also saw a growth of 36.2%, reflecting diversification in revenue sources.
Overall, the company’s growth in segments such as Aerospace and Defense and Power Generation contrasts with the decline in Oil & Gas, illustrating the dynamic nature of market demands and operational focus.
A Deep Dive into Mistras Group, Inc. (MG) Profitability
A Deep Dive into Mistras Group, Inc.'s Profitability
Gross Profit Margin: For the third quarter of 2024, the gross profit was $54.6 million, representing a gross profit margin of 29.9%. This marks a decrease of 40 basis points from the previous year.
Operating Profit: The income from operations was reported at $11.9 million for the third quarter of 2024, compared to a loss of $4.7 million in the same quarter of 2023.
Net Profit: The company achieved a net income of $6.4 million in Q3 2024, translating to earnings per diluted share of $0.20. This is a significant recovery from a net loss of $10.3 million or $0.34 per diluted share in the prior year period.
Trends in Profitability Over Time
For the nine months ended September 30, 2024, the gross profit increased to $161.8 million, with a gross margin of 29.1%, up 40 basis points year-over-year. The net income for the same period was $13.8 million, compared to a net loss of $14.9 million in the prior year.
Comparison of Profitability Ratios with Industry Averages
| Metric | Mistras Group (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 29.9% | 30.5% |
| Operating Profit Margin | 6.5% | 5.0% |
| Net Profit Margin | 3.5% | 2.8% |
Analysis of Operational Efficiency
In Q3 2024, selling, general and administrative expenses (SG&A) were $38.9 million, a decline of 1.7% year-over-year. This reduction in SG&A contributed to improved operational efficiency and profitability.
The adjusted EBITDA for the third quarter of 2024 was $23.3 million, reflecting an increase of 11.5% compared to the prior year. For the nine months ended September 30, 2024, adjusted EBITDA was $61.6 million, an increase of 32.1%.
Overall, the operational efficiency is highlighted by the ability to maintain a strong gross margin while effectively managing costs amidst fluctuating revenues across segments.
Debt vs. Equity: How Mistras Group, Inc. (MG) Finances Its Growth
Debt vs. Equity: How Mistras Group, Inc. Finances Its Growth
The company's gross debt as of September 30, 2024, was $189.7 million, a decrease from $190.4 million at the end of 2023, and $199.7 million as of June 30, 2024. The net debt, calculated as gross debt minus cash and cash equivalents, stood at $169.3 million on the same date, compared to $172.8 million at the end of 2023.
Debt-to-Equity Ratio
The debt-to-equity ratio is a critical metric in assessing the financial leverage of a company. As of September 30, 2024, the total equity of the company was $205.5 million. Therefore, the debt-to-equity ratio can be calculated as follows:
| Metric | Value |
|---|---|
| Gross Debt | $189.7 million |
| Total Equity | $205.5 million |
| Debt-to-Equity Ratio | 0.92 |
This ratio is slightly below the industry average, indicating a balanced approach to financing growth through debt and equity.
Recent Debt Issuances and Credit Ratings
In the recent quarter, the company successfully utilized operating cash flow to reduce its borrowings. The interest expense for the third quarter of 2024 was $4.3 million, compared to $4.2 million in the prior year. The company has not issued new debt recently, focusing instead on refinancing existing obligations and improving its cash flow position.
Balancing Debt and Equity Funding
The company has been strategic in balancing its debt financing and equity funding. For the nine months ended September 30, 2024, the net cash provided by operating activities was $24.5 million, up from $10.7 million in the previous year. This increase in cash flow allowed the company to fund its organic growth initiatives without relying heavily on new equity issuance, thereby maintaining a stable capital structure.
In summary, the company has effectively managed its debt levels while leveraging cash flows to support growth, positioning itself favorably against industry standards.
Assessing Mistras Group, Inc. (MG) Liquidity
Assessing Mistras Group, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $193,327,000 | $115,164,000 | 1.68 |
Quick Ratio: The quick ratio, which excludes inventories from current assets, is:
| Current Assets (less Inventories) | Current Liabilities | Quick Ratio |
|---|---|---|
| $178,817,000 | $115,164,000 | 1.55 |
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is:
| Working Capital | Calculation |
|---|---|
| $78,163,000 | Current Assets - Current Liabilities = $193,327,000 - $115,164,000 |
Cash Flow Statements Overview
Below is an overview of cash flow trends for the three months ended September 30, 2024:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Cash Flow | $19,356 | $(7,637) |
| Investing Cash Flow | $(5,935) | $(5,359) |
| Financing Cash Flow | $(11,508) | $9,348 |
Potential Liquidity Concerns or Strengths
The company reported a net cash provided by operating activities of $24,471,000 for the nine months ended September 30, 2024, compared to $10,684,000 in the prior year. The free cash flow was $6,324,000 for the first nine months of 2024, compared to $(5,587,000) in the prior year, indicating a significant improvement in liquidity.
As of September 30, 2024, the gross debt was $189,700,000, with net debt at $169,340,000. This reflects a decrease from $190,399,000 in gross debt as of December 31, 2023, showing effective debt management.
Is Mistras Group, Inc. (MG) Overvalued or Undervalued?
Valuation Analysis
To assess the valuation of Mistras Group, Inc. (MG), we will analyze key financial ratios including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA). We will also review stock price trends over the last 12 months, dividend yield and payout ratios, and analyst consensus on stock valuation.
Price-to-Earnings (P/E) Ratio
The P/E ratio is calculated by dividing the current share price by the earnings per share (EPS). As of October 2024, the current stock price is $4.40 and the diluted EPS for the third quarter of 2024 is $0.20.
The P/E ratio is:
P/E Ratio = Stock Price / EPS = $4.40 / $0.20 = 22.0
Price-to-Book (P/B) Ratio
The P/B ratio is calculated by dividing the stock price by the book value per share. The book value as of September 30, 2024, is calculated as:
Book Value = Total Equity / Shares Outstanding
Total equity is $205.543 million and shares outstanding are 31.007 million.
Thus, the book value per share is:
Book Value per Share = $205.543 million / 31.007 million = $6.63
The P/B ratio is:
P/B Ratio = Stock Price / Book Value per Share = $4.40 / $6.63 = 0.66
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated using the enterprise value (EV) and the EBITDA. As of September 30, 2024, the EBITDA for the last 12 months is $80 million (guidance for the full year).
To calculate EV, we use the formula:
EV = Market Capitalization + Total Debt - Cash
Assuming a market capitalization of $136.4 million (calculated from stock price and shares outstanding), total debt is $189.7 million, and cash is $20.36 million.
Thus, EV is:
EV = $136.4 million + $189.7 million - $20.36 million = $305.74 million
The EV/EBITDA ratio is:
EV/EBITDA = $305.74 million / $80 million = 3.82
Stock Price Trends
The stock price trends over the last 12 months show fluctuations between $3.00 and $5.00. Currently, the stock trades at $4.40, which is approximately 46% higher than its 52-week low of $3.00.
Dividend Yield and Payout Ratios
Mistras Group, Inc. has not declared any dividends as of the latest financial reports, thus the dividend yield and payout ratio remain at 0%.
Analyst Consensus
As of October 2024, the analyst consensus on Mistras Group, Inc. is Hold, with a target price estimate of around $5.00 based on current financial performance and market conditions.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 22.0 |
| P/B Ratio | 0.66 |
| EV/EBITDA Ratio | 3.82 |
| Current Stock Price | $4.40 |
| 52-Week Low | $3.00 |
| 52-Week High | $5.00 |
| Analyst Consensus | Hold |
Key Risks Facing Mistras Group, Inc. (MG)
Key Risks Facing Mistras Group, Inc.
Overview of Internal and External Risks
The company faces various risks that could impact its financial health, including:
- Industry Competition: Intense competition within the asset protection services industry, particularly from larger companies with greater resources.
- Regulatory Changes: Changes in regulations affecting environmental standards and safety protocols can lead to increased compliance costs.
- Market Conditions: Economic downturns can reduce demand for services, particularly in sectors like Oil & Gas and Aerospace.
Discussion of Operational, Financial, and Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Revenue Volatility: The company reported a 3.6% decrease in Oil & Gas revenue during Q3 2024 due to expected seasonal downturns.
- Healthcare Claims: Increased healthcare claims have contributed to a decrease in gross profit margin, which was 29.9% in Q3 2024, down 40 basis points from the previous year.
- Debt Levels: The gross debt as of September 30, 2024, was $189.7 million, a slight decrease from $190.4 million at the end of 2023.
Mitigation Strategies
The company has implemented several strategies to mitigate these risks:
- Cost Containment: SG&A expenses were reduced to $38.9 million in Q3 2024, down 1.7% from the prior year.
- Cash Flow Management: Generated $19.4 million in operating cash flow during Q3 2024.
- Strategic Partnerships: Ongoing collaborations with major clients to renew long-term agreements, enhancing revenue stability.
| Risk Factor | Details | Financial Impact |
|---|---|---|
| Industry Competition | High competition in asset protection services | Potential loss of market share |
| Regulatory Changes | Increased compliance costs due to new regulations | Higher operational costs |
| Market Conditions | Economic downturn affecting service demand | Revenue decline in key sectors |
| Healthcare Claims | Increased claims affecting profit margins | Gross profit margin decreased to 29.9% |
| Debt Levels | Gross debt at $189.7 million | Interest obligations impacting cash flow |
Future Growth Prospects for Mistras Group, Inc. (MG)
Future Growth Prospects for Mistras Group, Inc.
Analysis of Key Growth Drivers
The company is positioning itself for growth through various strategic initiatives. Key growth drivers include:
- Product Innovations: The introduction of advanced technology solutions in asset protection is expected to enhance service offerings.
- Market Expansions: The company has seen an 8.7% increase in international segment revenue, highlighting its expansion efforts beyond North America.
- Acquisitions: Continued focus on strategic acquisitions is anticipated to bolster market share and operational capacity.
Future Revenue Growth Projections and Earnings Estimates
Revenue for the full year 2024 is projected to be between $725 million and $730 million, revised from a previous estimate of $725 million to $750 million. Adjusted EBITDA is expected to range from $80 million to $82 million. The preliminary outlook for fiscal 2025 anticipates a low double-digit expansion in adjusted EBITDA and low single-digit organic revenue growth.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has renewed long-term agreements with several key clients, which are expected to provide stable revenue streams. Additionally, the collaboration between commercial and operations functions aims to enhance service delivery and customer satisfaction.
Competitive Advantages That Position the Company for Growth
The company’s competitive advantages include:
- Strong Financial Position: As of September 30, 2024, gross debt decreased to $189.7 million, the lowest since the acquisition of Onstream.
- Market Leadership: The company is recognized as a leading provider of integrated asset protection solutions, which strengthens its market position.
- Innovative Technology: The adoption of Industrial IoT-connected solutions enhances operational efficiency and service quality.
Financial Performance Overview
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Consolidated Revenue | $182.7 million | $179.4 million | 1.9% |
| Net Income | $6.4 million | Net Loss of $10.3 million | Positive Shift |
| Adjusted EBITDA | $23.3 million | $20.9 million | 11.5% |
| Gross Profit Margin | 29.9% | 30.3% | Decrease of 0.4% |
The company reported a net income of $6.4 million for Q3 2024, translating to earnings per diluted share of $0.20. This marks a significant recovery from a net loss of $10.3 million in the previous year, indicating effective cost management and operational improvements.
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Article updated on 8 Nov 2024
Resources:
- Mistras Group, Inc. (MG) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Mistras Group, Inc. (MG)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Mistras Group, Inc. (MG)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.